Calvert Cliffs 3 Makes No Economic Sense

Gov. Martin O'Malley should reject Electricité de France's (EDF) proposal to force Maryland residents to underwrite construction of a third nuclear reactor at Calvert Cliffs in Southern Maryland. Why? Because it makes no economic sense.

Little more than a year ago, the Maryland Public Service Commission approved EDF's acquisition of Constellation Energy's nuclear assets. But the commission wisely conditioned its approval on a series of protections that would ensure that Baltimore Gas & Electric's customers would not only be held harmless from any future bad business decisions by Constellation (BGE's parent company) but would actually benefit from the merger. This agreement should not be undone by EDF's promises that building a new reactor, while uneconomic now, will somehow become viable at some undisclosed time in the future.

It's been more than 30 years since anyone has built a new reactor in the United States, and the first generation of reactors was built with generous government subsidies. In part due to the industry's history of cost overruns and defaults, as well as the high costs and risks of new reactors, Wall Street will not bankroll them, so the industry is asking for more government handouts to launch a nuclear "renaissance." The public, however, is not enthused. A new NBC News/Wall Street Journal public opinion poll found that, out of 14 programs presented for potential budget cutting — including Social Security, college loans, Head Start and national defense — the most acceptable budget cut is for subsidies for new reactors. Fifty-seven percent of respondents said cutting these subsidies is either totally or mostly acceptable.

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