Constellation Energy Group Inc. pulled out of negotiations on a U.S. loan guarantee to build a nuclear reactor in Maryland with Electricite de France SA, potentially damaging the French utility's U.S. expansion plans and the companies' partnership.
The cost of a $7.5 billion U.S. government loan guarantee that the companies' joint venture, UniStar Nuclear Energy, would need to build the Calvert Cliffs 3 reactor is too high and creates too much risk for Constellation, the Baltimore-based utility said in a statement on Oct.10. The statement said the next step is up to EDF.
Constellation's decision deals a blow to relations with EDF, which is waiting for the U.S. utility to decide whether to exercise a put option that could force EDF to buy as much as $2 billion of Constellation's non-nuclear power plants. That may be more likely after the withdrawal, said Ingo Becker, head of utilities sector research at Kepler Capital Markets.
