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Nuclear Monitor Issue: 

(December 17, 2008) Areva, the French nuclear power giant whose incessant, bubbly, techno-pop commercials on cable news shows have made it increasingly well-known in the United States, has ambitious plans to expand its presence in the U.S. These include construction of four, and likely six, new EPR reactors through its conduit UniStar Nuclear; construction of a uranium enrichment plant in Idaho; and construction of a large components forging facility in Virginia. But it faces new challenges to its flagship reactor project at Calvert Cliffs, Maryland and an increasingly muddy, and potentially nasty, fight over the future of its U.S. utility partner Constellation Energy.


(681.) NIRS Washington -  UniStar Nuclear is half-owned by Constellation Energy and half by Electricite de France (EdF). It exists to bring Areva EPR (Evolutionary Power Reactors) reactors to the United States. UniStar has submitted applications to the Nuclear Regulatory Commission for new reactors at Constellation Energy sites at Calvert Cliffs and Nine Mile Point in New York, and through other utility partners in Missouri and Pennsylvania. And UniStar owns Amarillo Energy in Texas, which reportedly has plans to build two new EPRs on a greenfields site near Amarillo.


Calvert Cliffs is first in UniStar’s line, and is intended to serve as the lead application for all of the rest of its reactors. But despite the support of Maryland’s Democratic governor Martin O’Malley, Calvert Cliffs is encountering more resistance than UniStar expected. Already facing a challenge to its permit application before Maryland’s Public Service Commission, UniStar learned on November 19 of a challenge to its NRC application from four organizations: NIRS, Public Citizen, Beyond Nuclear and a newly-formed citizens group in Calvert Cliffs home at Calvert County, Maryland (where it had counted on overwhelming public support), SOMDCARES.


The groups’ intervention has sparked creation of an NRC Atomic Safety and Licensing Board (ASLB) that will rule on the contentions raised by the environmental coalition, including that the project violates the Atomic Energy Act’s prohibition against foreign ownership, domination or control of a nuclear power project; that Constellation’s fragile economic status means it cannot guarantee adequate decommissioning funding; that the application does not consider the cumulative impacts of adding yet another reactor dumping radioactive and chemical materials into the Chesapeake Bay, which already suffers from the releases of 11 reactors across the mid-Atlantic region; that the application does not adequately consider the possible effects of a catastrophic fire at a nearby Liquified Natural Gas terminal; and that the proposed facility has not demonstrated that there is anywhere to put either its high-level or “low-level” radioactive waste (the full petition can be read at


The ASLB won’t decide on a hearing schedule, or even exactly what contentions it will hear, for a few months. But the intertwined trio of Areva, UniStar and EdF faces another unforeseen problem that could bring down all of its plans.


In September, Constellation Energy (the 50% owner of UniStar and the necessary U.S. component of the trio), which has both regulated and unregulated subsidiaries, fell victim to the economic collapse, particularly the failure of the Lehman Brothers investment firm, with which it was closely allied. Some reports suggest that Constellation was one day short of complete bankruptcy. In stepped the legendary bargain hunter, billionaire Warren Buffett and his MidAmerican Energy Holdings Company, which, in a hurried process agreed to buy Constellation--valued at more than US$20 billion in January 2008, for US$4.7 billion, or less than ½ the estimated cost of the Calvert Cliffs-3 reactor alone. Buffett saved Constellation’s existence by fronting US$1 billion (750 million euro) in cash to keep the company going pending shareholder and regulatory approval of the merger.


Constellation’s largest shareholder is EdF, which owns 9.5% of the company, and EdF apparently is nervous about Buffett’s intentions--although so far Buffett has indicated support for the UniStar concept. But last year Buffett spent US$10 million investigating the possibility of building a new reactor in Idaho and scrapped the project saying that it wouldn’t be beneficial for either ratepayers or MidAmerican Energy.


So in early December, EdF came up with a counter-offer: it would pay US$4.5 billion to buy just 50% of Constellation Energy’s current and aging nuclear assets, which consists of two existing reactors at Calvert Cliffs, two reactors at Nine Mile Point, and the Ginna reactor in New York. In addition, it would offer to buy up to US$2 billion worth of non-nuclear Constellation power plants. To many Constellation shareholders, who are aghast at how their stock has plummeted over the past year and who feel that Buffett’s offer undervalues the company, EdF’s offer seems attractive.


While EdF’s offer might not pass muster under the Atomic Energy Act, most Constellation shareholders have probably never heard of the foreign ownership/domination/control prohibition. And if EdF is successful in its offer, that issue could be tied up in court for years --but EdF would essentially control the company and its UniStar subsidiary in the interim. After all, EdF is certainly not going to do an evaluation of a nuclear project that would result in its cancellation.


For its part, Constellation’s board of directors continue publicly to say they favor MidAmerican’s offer, but on December 8 announced that they are now also talking to EdF. A shareholder’s meeting is scheduled for December 23 to consider Buffett’s offer, which MidAmerican Energy says it has no interest in increasing. If the offer is rejected there, the EdF offer likely will be accepted later on. Although, if the Buffett offer is rejected, the uncertainty over Constellation’s future could lead to further reductions in the company’s value.


Meanwhile, activists are also gearing up for the December 23 meeting. The Chesapeake Safe Energy Coalition plans to be there to alert shareholders to the problems of UniStar and EdF and Areva involvement in Constellation and Calvert Cliffs. They’ll also be presenting thousands of petition signatures to Warren Buffett, calling on him to close the company’s UniStar subsidiary if he is successful in taking over Constellation.


And the issue has become further muddied before the Maryland Public Service Commission, where some 30 entities, including NIRS and other environmental groups, have intervened in the proceedings over the MidAmerican/Constellation buyout. While some of the entities appear interested only in getting the best possible deal on electric rates, others, such as EdF, seem to want to scuttle the deal. NIRS and its allies are seeking a condition that would force Buffett to close UniStar if he doesn’t do it on his own, and are seeking re-regulation of Maryland’s failed effort at deregulating the state’s electricity sector, which has led to sharply-higher electric rates and reduced regulatory oversight, while providing no new competition in the electricity sector. Hearings on that process are scheduled to begin in early 2009. And it is increasingly likely that the entire electricity deregulation issue will be revisited by the Maryland legislature, whose session begins in January 2009. Indeed, the Maryland Public Service Commission (PSC) issued a report early December that recommended at least partial re-regulation be instituted in the state.


In the face of all these pressures, the future of Areva and EdF’s French nuclear invasion of the United States is very much up in the air.


Source and contact: Michael Mariotte, NIRS Washington