Once promoted as the vanguard of a "nuclear renaissance," a proposed new reactor at the Calvert Cliffs nuclear power plant in Southern Maryland now faces a major new roadblock, with federal regulators threatening to shelve the troubled $9.6 billion project unless the French-controlled developer comes up with a U.S. partner in the next two months.

The ruling Thursday by the Atomic Safety and Licensing Board was not unexpected, as the board's parent Nuclear Regulatory Commission had warned Unistar Nuclear Energy more than a year ago that it could not get a license for the Maryland reactor without a U.S. partner. Federal law prohibits foreign ownership or control of a U.S. nuclear plant, and Unistar is owned by the French energy group EDF.

Unistar was the first to submit even a partial application for a new nuclear reactor in the United States in nearly 30 years when it filed initial plans in 2007 for the third reactor at Calvert Cliffs near Lusby. But the project has been under a cloud for nearly two years, since Baltimore-based Constellation Energy, which now operates the two reactors at Calvert Cliffs, pulled out of its partnership in Unistar, leaving EDF in sole control.

Unistar did not respond Friday to requests for comment, but EDF previously has stated that it intends to obtain a U.S. partner for the project. In its 29-page ruling, though, the licensing board noted that Unistar has shown no progress in locating a new partner in nearly two years.

Opponents of the project hailed the licensing board's decision, calling it a victory for those who fear nuclear power is unsafe and a blow to the industry's revival.

"This is a great day for Maryland," Michael Mariotte, executive director of the Nuclear Information and Resource Service, said in a statement. The group, based in Takoma Park, had formally challenged the legality of Unistar's ownership years ago.

"Marylanders need not fear another dangerous nuclear reactor in our state," Mariotte added, "nor the accumulation of still more lethal radioactive waste on the shores of the Chesapeake Bay."

While the federal ruling is not necessarily the end of the project, observers say economic forces rather than legal or regulatory barriers are what's holding it back, and may ultimately kill it.

Though the Calvert Cliffs project was the first proposed in the so-called nuclear renaissance, a few others have proceeded as it languished. Construction is under way on new reactors in Georgia, South Carolina and Tennessee, said Steve Kerekes, spokesman for the Nuclear Energy Institute, an industry trade group.

In each of those states, Kerekes said, energy generation is still regulated, and developers of the reactor projects are able to charge ratepayers to help cover the costs as they are being built.

Projects in states like Maryland with unregulated energy markets must obtain private financing, a daunting task in the current economic climate.

A state official expressed disappointment but not surprise at the ruling. Gov. Martin O'Malley has supported the reactor project, which Unistar has said would employ about 4,000 people to build and another 350 to operate.

Maryland officials also had looked to the 1,600-megawatt reactor to help avert a projected power shortage in the state. The Public Service Commission warned five years ago that lack of new electricity generation and bottlenecks in transmission lines could produce rolling blackouts as early as last year.

But Malcolm D. Woolf, director of the Maryland Energy Administration, said the need for the reactor's power is not as great now. Economic conditions and the advent of cheap natural gas also have dimmed the nuclear project's prospects, he suggested.

Demand for electricity has yet to fully recover since the recession drove it down, Woolf said, and state-sponsored programs to encourage energy conservation have helped reduce electricity consumption, especially summer peak usage when air conditioners are turned up during heat waves. Blackouts are no longer on the horizon.

Two major transmission line projects that would have crossed the state were canceled recently, Woolf said, because of the lag in electricity demand caused by the still-slow economy and because of other energy projects coming online. One is a 600-megawatt natural gas plant under construction in Charles County, he pointed out.

Under the circumstances, prospects for Unistar to find a U.S. partner willing to invest in a new nuclear reactor don't seem bright. Constellation's CEO had said in 2010 that "unacceptable risks and costs" associated with getting federal backing for the project's financing prompted the company to pull out of the effort to build it.

Since then, Constellation has merged with Exelon Corp., the Chicago-based energy company that is the nation's leading operator of nuclear plants. But an Exelon spokesman made clear Friday that while the company is seeking to boost the output of its existing nuclear reactors, it's not interested in a project its merger partner walked away from.

"Exelon has no near-term plans to build a new nuclear plant," said spokesman Paul Adams.

Even if Unistar fails to meet the government deadline for finding a U.S. partner, the licensing board indicated it would reopen the case if the company could show progress toward meeting the law's ownership requirements.

In the meantime, the NRC staff still could continue its safety evaluation of the proposed reactor, said commission spokeswoman Diane Screnci. The commission has completed an environmental review of the project, and in a separate ruling Thursday the licensing board rejected opponents' objections to it.

If the NRC staff continues to review the proposed plant, that could be a silver lining of sorts, said Norman Meadow, vice chairman of the Maryland Conservation Council. He is one of a handful of environmentalists who has supported the nuclear project, arguing it would do less harm to the environment than wind turbines, solar farms and other renewable-energy projects.

Unistar has proposed using a reactor designed by AREVA, another French company, Meadow pointed out. Should that design pass muster with the NRC, it could smooth the way for other nuclear projects using the same reactor design, even if another reactor never gets built at Calvert Cliffs.

"Its sort of like a pothole in the road," Meadow said of the licensing decision. "It's not like a cliff that the bus ran over."

tim.wheeler@baltsun.com

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