Constellation pulls plug on nuke reactor and $7.5 billion DoE loan

Constellation Energy has pulled the plug on building a new reactor at its Calvert Cliffs (Md.) nuclear plant despite a promised $7.5 billion Energy Department loan guarantee, dealing a potential blow to efforts to create a U.S. nuclear renaissance as well as the promised effectiveness of the department’s loan program.
 
The company — in a letter Friday to Deputy Energy Secretary Dan Poneman — cited “significant and ongoing uncertainty” due to the White House Office of Management and Budget’s “inability to address significant problems with its methodology for determining the project’s credit subsidy cost and the unreasonably burdensome conditions a loan guarantee under this approach would require.”
 
Michael Wallace, Constellation’s vice chairman and chief operating officer, added in the letter that the company “does not see a timely path to reaching a workable set of terms and conditions that would be economically reasonable and statutorily justifiable.”

Senior Obama administration officials said Constellation’s decision was “a surprise,” the Washington Post is reporting.
 
Constellation and French power company Electricite de France are partners in a joint venture, Unistar, that intended to make the Calvert Cliffs reactor the first of a fleet of identical units around the country. But low natural gas prices have made that fuel an attractive option, and the failure of Congress to pass climate legislation that would have boosted fossil fuel prices and “steep construction costs make the project a financial stretch for utilities like Constellation,” the Post’s story notes.

House Majority Leader Steny Hoyer (D-Md.) — who was helping to try to secure a loan guarantee for the reactor — called Constellation's decision a "disappointment" and is pledging to try to revive the project, according to the Post.
 
The administration has approved only one conditional loan guarantee for a nuclear power project — to be built by Southern Company in Georgia. Southern Company, under Georgia state law, is allowed to recover costs while the plants are under consideration, while Maryland regulations say power-plant construction costs can be passed through to customers only once the plant is operating, according to the Post.
 
Meanwhile, the White House late Friday afternoon announced a conditional commitment to provide a $1.3 billion loan to support the world’s largest wind farm. It would finance the Caithness Shepherd Flat project — an 845-megawatt wind-powered electrical generating facility in eastern Oregon sponsored by Caithness Energy LLC and General Electric Energy Financial Services.
 
“Thanks to the Recovery Act, we are creating the clean energy jobs of the future while positioning the U.S. as a world leader in the production of renewable energy,” Energy Secretary Steven Chu said in a prepared statement. “This project is part of the Administration’s commitment to doubling our renewable energy generation by 2012 while putting Americans to work in communities across the country.”
 
The project consists of 338 wind turbines supplied by GE. It is the largest project to date to receive a conditional commitment for a loan guarantee under the Energy Department’s Financial Institution Partnership Program, which was created in last year’s stimulus bill.
 
The administration has been touting potential and existing jobs created by last year’s stimulus bill amid Republican attacks that the $800 billion measure has been ineffective.
 
Federal jobs figures — the last that will be issued before the Nov. 2 midterm election — indicated the unemployment rate in September stayed at 9.6 percent.
 
 “The White House promised that massive federal spending would keep the unemployment rate below 8 percent,” Sen. John Barrasso (R-Wyo.) said in Saturday’s Republican weekly address. “Instead what taxpayers got was $800 billion in new debt and nearly 10 percent unemployment.”

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