On October 9, 2010, Constellation Energy Group (“Constellation”) issued a press release regarding the status of their loan guarantee application in connection with their UniStar Nuclear Energy Calvert Cliffs 3 project. Constellation stated they wrote to the Department of Energy (“DOE”) and informed DOE that Constellation would not move forward due to “unworkable” proposed terms and conditions of the loan guarantee.
In their letter to DOE, Constellation cited the Office of Management and Budget’s (“OMB”) calculation of credit cost. At one point the credit costs for Constellation were expected to be $880 million in order to receive the loan, but efforts to negotiate the costs down to an agreeable level were unsuccessful. Constellation stated there is a “significant problem” with the way that OMB calculates the credit cost; thus, Constellation found this cost would pose “unacceptable” risks and expense to the company and could not move forward with their loan guarantee application. Constellation’s partner in Calvert Cliffs 3, Electricite de France (“EDF”), did not withdraw its application for the federal loan guarantee, and Constellation reiterated that its position is that of Constellation alone. EDF owns a 49.4 percent stake in Constellation’s nuclear group.
Constellation’s withdrawal prompted Senator Jeff Bingaman (D-N.M.) to call for an “overhaul” of the DOE loan guarantee program. Senator Bingaman has proposed a federal “Clean Energy Deployment Administration,” or “green bank,” which would provide financing for renewable energy, transmission and other projects. Senator Bingaman’s idea of a “green bank” has been introduced before, in both a large energy bill and in the cap-and-trade and energy bill in the House in 2009.