BALTIMORE, September 17 - Citizens, consumer and environmental organizations urged the Maryland Public Service Commission (PSC) to deny approval of the transaction between Constellation Energy and Electricite de France at a public hearing today. The Chesapeake Safe Energy Coalition recruited experts and members of the public to testify against the deal.
“This deal is bad for ratepayers,” said Johanna Neumann, state director of Maryland PIRG. “It’s unnecessary and could jack up utility rates without any benefit to consumers.”
Recently Constellation Energy and EDF threatened that if the PSC fails to approve the transaction, they will scrap construction of a new nuclear reactor in Maryland. The new reactor is estimated to cost $10 billion.
“If the failure to reach a deal causes Calvert Cliffs III to get cancelled, good riddance,” said Ethan Nuss with the Chesapeake Climate Action Network. “Future generations in Maryland deserve cleaner and safer energy sources like solar and wind.”
Advocates cited financial resource diversion, likely downgrading of Constellation’s credit, and expensive power generation as reasons for higher rates if the deal is approved and the proposed nuclear reactor is constructed.
DIVERSION OF RESOURCES FROM BGE:
Risky business ventures by the parent company could threaten or divert BGE’s resources away from providing quality affordable electric service for Marylanders. Mayo Shattuck, Chairman and CEO of Constellation Energy, testified before the PSC in April 2009 that BGE’s capital needs are already “actually greater than its own cash generation.” In the interest of stabilizing financing for risky projects, Constellation management could divert resources from BGE and cause critical system improvements to be delayed or ignored.
LOWER BOND RATING:
Constellation and EDF have said they need this deal to move forward with Calvert Cliffs III. Yet, pursuit of a new nuclear reactor is likely to harm ratepayers. Some have argued Constellation’s bond rating could drop if the deal doesn’t go through, but the opposite is more likely. Constellation executives submitted evidence to the PSC that Moody’s Investor Service confirms its bond rating of Constellation will stay the same whether or not the deal goes through. But Moody’s and other credit agencies also have indicated that utilities that pursue construction of new nuclear reactors could have their credit rating downgraded because of the riskiness inherent in nuclear projects. BGE’s credit rating is directly tied to that of Constellation.
“Utilities that over-extend their financial resources by trying to build risky and expensive nuclear power plants may take a hit on their credit rating and will pass the higher interest rates on to ratepayers,” said Neumann.
NUCLEAR POWER IS EXPENSIVE.
“The price of nuclear power is off the charts,” said Michael Mariotte, executive director of Nuclear Information & Resource Service.
BGE customers currently pay about 11.97 cents/kwh. The California Energy Commission recently issued a report projecting nuclear generating costs in 2018—about when Calvert Cliffs III could come online—at a staggering 34.24 cents/kwh, nearly triple current costs in Maryland. In the same study, the commission found that all renewable sources of energy were cheaper than nuclear power in that timeframe.
“If this deal moves forward and Calvert Cliffs III gets built, BGE ratepayers will be burned twice: Once through higher interest rates, then by higher power prices if the proposed nuclear plant comes online, ” said Allison Fisher with Public Citizen. “If Constellation and EdF move forward with their plans to built the reactor, but later abandon the project for financial reasons, Marylanders would still suffer a one-two-punch through higher interest rates and by having to foot the bill for the failed project through federal loan guarantees.”
Along with recruiting citizens to testify at the public hearing, several coalition members have also intervened in the PSC’s evidentiary hearings to urge the Public Service Commission to vote “No Deal”.
