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Constellation Energy "Unable" to Continue with Calvert Cliffs 3 Loan Guarantee Process, Citing Credit Costs

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October 11, 2010

Constellation Energy on October 8 informed the U.S. Department of Energy that it cannot move forward with the loan guarantee process regarding UniStar Nuclear Energy's Calvert Cliffs 3 loan guarantee application because, "the proposed terms and conditions are unworkable."

In a letter sent to DOE, Constellation Energy said that the cost of the loan guarantee that is calculated by the Office of Management and Budget (OMB) is "unreasonably burdensome" and would create unacceptable risks and costs for the company.  Constellation said that there is a "significant problem" in the way OMB calculates the credit cost.  "After repeated unsuccessful attempts to resolve this issue with DOE and OMB, we no longer see a timely path to reaching a workable set of terms and conditions," Constellation said.

OMB had pegged UniStar's credit requirement as $880 million.  Though OMB offered to lower the amount on several conditions (such as Constellation agreeing to buy 75% of the plant's power), Constellation called the proposals unworkable.

UniStar has not withdrawn its application for a federal loan guarantee and no decisions have been made regarding the future of Calvert Cliffs 3, Constellation said.  "With regards to Calvert Cliffs 3, this is a matter that will have to be discussed by Constellation Energy and EDF and taken under consideration by UniStar's Board of Directors.  EDF has not yet informed Constellation Energy of its position related to the pending loan guarantee terms and conditions," Constellation said.

EDF said that it was "disappointed and shocked" by the withdrawal.

   
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