They can cancel the beret and tricolor-flag orders at the Perryman Power Plant.
The French won't buy the Harford County facility after all. On Tuesday, owner Constellation Energy Group agreed to cancel its option to sell about a dozen electricity plants to EDF Group, the big energy company controlled by the French government. At the same time, Constellation let EDF assume development of a third nuclear reactor at Calvert Cliffs in Southern Maryland.
But I wouldn't start polishing the escargot forks at Calvert Cliffs, either.
The challenges faced by an all-French Calvert Cliffs 3 are just as enormous as they were three weeks ago when Baltimore-based Constellation decided to bail out. Bigger, actually.
Constellation, owner of Baltimore Gas and Electric, gets a quarter-billion dollars out of the settlement that resolved various disputes between the two companies — an outcome that displeased some on Wall Street and probably a bunch of lawyers, too.
"Disappointing," wrote Michael S. Worms, who follows Constellation's stock for BMO Capital Markets.
The analysts wanted a higher ransom paid by EDF in return for Constellation's agreement to defuse the option bomb. Granted, when Constellation badly needed cash almost two years ago, the option gave the company the right to sell Perryman and other fossil-fuel generation plants to EDF for up to $2 billion.
When the value of the plants plunged along with electricity prices, the value of the option rose. The French threatened endless litigation if Constellation pulled the trigger. Constellation said it would do what was best for shareholders.
Not financing a lawyer relief plan with corporate court battles was probably good for both companies even if analysts think Constellation boss Mayo Shattuck left money on the table. EDF paid $110 million in Constellation stock as the price of canceling the option.
But if Shattuck got shortchanged on the option, he may have done better on the Calvert Cliffs part of the settlement. EDF agreed to buy Constellation's 50 percent stake in that project and other nuclear development for $140 million, essentially paying back Constellation for some of the money it spent in developing and promoting the potential reactor.
This is new money that EDF is throwing into an old and unpromising hole. Building a new generation of nuclear-power plants was always a challenging proposition. In the last year it has gotten much more so.
Enormous new supplies of natural gas are expected to make nuclear-stoked electricity less competitive. Why spend $9 billion constructing a 1,600-megawatt reactor when you could build an equally powerful natural-gas facility for $2 billion and run it on cheap, non-radioactive fuel?
And $9 billion is probably just a down payment. In Flamanville, France, EDF is building a reactor similar in design to the one planned for Calvert Cliffs. Flamanville is two years behind schedule and more than $1 billion over budget, Bloomberg News reported last summer.
A half-decent climate bill passed by Congress could have given nuclear energy a chance — even with the plunge in natural-gas prices. A cap-and-trade setup for carbon emissions or a carbon tax could have made carbon-free nuclear energy attractive. But that's not going to happen.
The reason Constellation Energy decided to quit development of a new Calvert Cliffs reactor — refusal by the Energy Department to provide attractive construction-loan guarantees — hasn't changed. Nor has the fact that the Maryland Public Service Commission can't promise customers and a guaranteed revenue stream for the new reactor. Deregulation saw to that.
Now EDF needs to find another American partner to satisfy prohibitions on foreign control of nuclear facilities. It's hard to imagine that Exelon, Southern Co. and other U.S. nuclear companies don't see the same problems with Calvert Cliffs 3 that Constellation did.