France Makes Strategic Entry into U.S. Nuclear Power Generation

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Researched by Industrial Info Resources (Sugar Land, Texas)--On December 23, shareholders of Constellation Energy Group Incorporated (NYSE:CEG) (Baltimore, Maryland) were expecting to vote on a proposed merger with MidAmerican Energy Holdings Company (Des Moines, Iowa). Instead, this meeting was cancelled, and the merger agreement, made in September of this year, was terminated. In place of the merger, EDF Development Incorporated, a wholly owned subsidiary of Electricite de France SA (EPA:EDF) (Paris, France) will be making a substantial investment in Constellation's nuclear-power division.

The announcement was made last week that EDF Development would acquire 49.99% of Constellation Energy Nuclear Group LLC for $4.5 billion, which includes an immediate $1 billion cash investment that will help strengthen the balance sheet and maintain the liquidity currently needed by Constellation. "In the final analysis," said Constellation's President, Chairman and CEO Mayo Shattuck, "we concluded that the EDF investment represents significant enhanced value for our shareholders and serves the best interests as well of our customers, our employees, our regulators, and the communities we serve." The decision makes the planned merger with MidAmerican unnecessary. MidAmerican will receive a $175 million termination fee for cancellation of the contract.

Constellation previously created the Unistar joint venture with EDF, with intentions of building nuclear power stations in the U.S. This new agreement gives a certain amount of control to EDF of Constellation's three existing nuclear facilities, which consist of the Calvert Cliffs Nuclear Plant in Lusby, Maryland; the Nine Mile Point Station in Lycoming, New York; and the R.E. Ginna Nuclear Power Plant in Ontario, New York.

Industrial Info is currently monitoring more than $12.1 billion of current and planned projects at these nuclear energy stations. Both the Calvert Cliffs Nuclear Plant and Nine Mile Point are planning expansions, requiring investments of approximately $6 billion each. The Calvert Cliffs expansion is expected to begin very soon, while the Nine Mile Point expansion is planned to kick off in 2011. Additionally, the Calvert Cliffs facility has two scheduled outages planned for the plant's two existing reactors. Unit 2 will undergo a refueling outage, planned for March of 2009, while Unit 1 will undergo a 35-day maintenance outage, anticipated for February 2010. Both outages have an estimated cost of $10 million. Information on these and other projects can be found in Industrial Info's North American Industrial Database.

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