(Breaking news) FERC OKs EDF/Constellation deal

Monday, Feb. 23, 2009

The Federal Energy Regulatory Commission gave its blessing Thursday to a planned sale of an interest in Constellation Energy's nuclear operations to an energy company controlled by the French government, according to a press release.

On Feb. 19, FERC authorized EDF Development Inc., a unit of Electricite de France SA, to spend $4.5 billion to acquire a 49.99 percent ownership interest in Constellation Nuclear, a Constellation Energy subsidiary that controls the company's nuclear operations, including Calvert Cliffs Nuclear Power Plant in Lusby. The sale is expected to close by the end of this year, according to the release.

Under the terms of the deal, EDF would also invest $1 billion in cash in Constellation Energy in a non-voting form of stock, and provide Constellation with additional financial support up to $2 billion, if necessary, under an agreement where Constellation would have the right to sell stock in non-nuclear facilities to EDF at a pre-agreed price, an agreement that would expire in 2010.

FERC found the terms of the deal to be in accordance with the Federal Power Act, because it "will not adversely affect competition, rates or regulation," will not provide a subsidy to any non-utility company and will not require Constellation to pledge assets for the benefit of a non-utility company, according to the release.

Constellation Energy declined to comment on the approval except for a one-sentence statement from spokeswoman Maureen Brown, released via e-mail.

"We are pleased to have received FERC approval and look forward to continuing toward finalizing the transaction with EDF," Brown wrote.

Paul Gunter, who is in charge of nuclear reactor oversight for an anti-nuclear nonprofit organization, said he remains concerned by the potential for foreign control of domestic nuclear plants. He does not, however, think the approval will affect the outcome of a legal challenge filed by his group, Takoma Park-based Beyond Nuclear, and three other environmental groups before the U.S. Nuclear Regulatory Commission.

That proceeding, filed November 2008, petitions the NRC to hold a new series of public hearings on plans by Constellation and EDF to construct a third reactor at Calvert Cliffs, a deal that is separate from EDF's plan to invest directly in Constellation Nuclear. The environmentalists maintain that aspects of the deal violate federal law or endanger public safety, and include an allegation that EDF's existing 9.5 percent interest in Constellation Energy makes it ineligible to collaborate with Constellation on nuclear projects.

The NRC has urged the Atomic Safety and Licensing Board, an independent body empanelled to review the request, to reject the petition.

"They're certainly different proceedings, and there are a number of contentions that are unrelated to the FERC proceeding," Gunter said. "It's also the issue of the court of public opinion — that's still very much a viable issue here, particularly when we're talking about most-cost electricity from nuclear power," a reference to a contention by Beyond Nuclear that nuclear is the most expensive form of power generation available.

Linda Vassallo, county director of economic development, said the approval is a good thing for the region.

"It looks to me like this is the first step in the process," she said. "We are pleased FERC approved the transaction, and we're looking forward to seeing the final transaction complete."

emitrano@somdnews.com