Electricite de France SA, France's biggest company, agreed to build four nuclear reactors in North America as part of a joint venture with Constellation Energy Group Inc.
The largest atomic power producer, with 58 reactors, has the option to buy a 9.9 percent stake in Baltimore-based Constellation, Chief Financial Officer Daniel Camus said at a presentation in Paris today. The purchase would cost about 1.5 billion euros ($2.05 billion), he said. The accord was signed two days ago, Chief Executive Officer Pierre Gadonneix said.
The reactors will be Electicite de France's first in the U.S., the world's biggest energy consumer. Nuclear energy is being revived as governments seek to meet energy demand while cutting pollution. The Paris-based utility said last month it would spend as much as $625 million to set up the Constellation partnership. It's also planning reactors in the U.K.
“It shows a pretty strong commitment by EDF,'' said Matthias Heck, an analyst for Oppenheim Research GmbH based in Frankfurt. “We're talking about figures above 10 billion euros here.''
The U.S. has 104 working reactors, almost twice as many as France. The Nuclear Regulatory Commission said it expects to get applications to build 27 reactors in the U.S. in 2007 and 2008. Of those, one would be at Constellation's Calvert Cliffs plant in southern Maryland and another at Nine Mile Point Nuclear Station in New York, said commission spokeswoman Ivonne Couret.
Constellation shares rose 19 cents to $82.94 in composite trading on the New York Stock Exchange. Electricite de France fell 0.8 percent to close at 74.12 euros.
Constellation Expansion
Lisa Lundberg, Constellation spokeswoman, said the company is also considering new reactors at its Ginna site in New York. In July, the company became the first to file a partial application to build an atomic unit in the U.S. in almost 30 years, seeking permission for a third reactor at Calvert Cliffs.
Constellation submitted an environmental report to regulators, going a step beyond companies including Exelon Corp., Southern Co. and Dominion Resources Inc., which filed requests for so-called early site permits.
Richard Newell, a professor of energy and environmental economics at Duke University in Durham, North Carolina, said the Constellation-Electricite de France deal will be an important development if other companies follow suit and build new reactors in the U.S.
`Very Significant' Deal
The agreement, which also includes Canada, “is very significant in the sense that it would be an initial resurgence in an area that's been stifled for a very long time,'' Newell said in an interview today. If other companies don't follow suit, “then you only have a drop in the bucket,'' he added.
The partners intend to use a U.S. version of the so-called European Pressurized Reactor technology, developed by Areva SA, the world's biggest maker of nuclear plants. The bill for building the four units could exceed 13 billion euros, based on the French company's estimated cost for the Flamanville-3 reactor under construction in France.
“We continue to develop our business plan for a fleet of a minimum of four standardized EPRs,'' George Vanderheyden, president and chief executive officer of the new venture, UniStar Nuclear Energy LLC, said today in an e-mail. “We have not made a final decision on the location of these reactors.''
UniStar Nuclear Energy is also targeting investments “in other opportunities in the U.S. energy market,'' Gadonneix said.
Electricite de France's role in building reactors could be more limited in the U.S. than in France, where it works alongside Areva, because Constellation already has contracts with Bechtel Group, he said.
Gadonneix said the utility will spend 800 million euros to repair 15 reactors through 2009 after engineers found faults in steam generators. The company will have to extend maintenance stops to carry out cleaning, spokesman Francois Molho said today in a telephone interview from Paris.
