Constellation Energy turns back on Calvert Cliffs loan guarantee

11 October 2010

Constellation Energy has told the US Department of Energy (DOE) that it cannot move forward with the loan guarantee process for Calvert Cliffs 3 EPR because the “proposed terms and conditions are unworkable.”

Calvert Cliffs nuclear power plant
Calvert Cliffs. Copyright Constellation Energy Group, Inc. 2008

In a letter sent to DOE on 8 October, Constellation Energy said the cost of the loan guarantee that is calculated by the Office of Management and Budget (OMB) is unreasonably burdensome and would create unacceptable risks and costs for the company.

The utility and its partners would have been expected to pay an $880 million credit subsidy cost to the US Treasury in order to receive the loan guarantee. This equates to 11.6% of the total loan.

In its letter, Constellation Energy said this was ‘a shockingly high estimate of the credit subsidy cost’ and that such a sum would ‘clearly destroy the project’s economics (or the economics of any nuclear project for that matter).’

Despite Constellation Energy’s decision, Unistar (the joint-venture between Constellation Energy and EDF that is developing Calvert Cliffs 3) has not withdrawn its application for a federal loan guarantee. The decision whether or not to proceed with the application now rests with EDF.

The decision is not entirely unexpected. In late July, Constellation Energy announced that it was reducing spending on the Calvert Cliffs EPR reactor project due to the delay and uncertainty surrounding the receipt of a loan guarantee.

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