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Old nuclear plants have low market value, new ones not viable

..Constellation’s finances have stabilized but demand for electric power has fallen, reducing not only the market value of old power plants but the viability of building new ones.

Constellation’s fallout with French firm unfortunately the new business as usual, The Washington Post, By Steven Pearlstein, October 14, 2010 If you were looking for an example of the erosion in standards of business behavior, you couldn’t do better than the story of Constellation Energy and its recent falling-out with the French nuclear energy company EDF…..….Constellation’s finances have stabilized but demand for electric power has fallen, reducing not only the market value of old power plants but the viability of building new ones. The economic prospects of the Calvert Cliffs plant have also been challenged by a sharp drop in the cost of producing power from natural gas and the failure of Congress to pass climate-change legislation that would have raised the price of producing power from coal. And if all that weren’t enough, the cost of the federal government’s loan guarantee for the project came in at $880 million, three times what the partners had expected………

Constellation’s political problems, however, go deeper. For years, the electric industry told Americans they would be better off if their industry were freed from suffocating regulation and companies could compete to sell power to households and businesses. When oil and gas prices rose, utility executives blamed environmentalists and government regulators for thwarting the promise of nuclear power. And like most other industries, it joined the chorus of business interests demanding less government interference in the economy.

Now everything that the industry asked for has been granted, but things haven’t exactly worked out as promised. Constellation has turned itself into a competitive merchant power generator, but its customers are paying more for their electricity than ever. In search of low-carbon energy, a liberal Democratic administration has thrown its support to construction of new nuclear plants, only to find that companies like Constellation have suddenly lost interest. And what does Constellation want now? A more generous package of loan guarantees……..

Steven Pearlstein – Constellation’s fallout with French firm unfortunately the new business as usual

October 15, 2010 - Posted by | business and costs, USA | , , , , , , ,

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