EDF, Constellation Nuclear Venture May Recruit Exelon

By Jim Polson and Tara Patel

Dec. 18 (Bloomberg) -- Electricite de France SA wants to recruit Exelon Corp., the largest U.S. nuclear-power producer, to join its development joint venture with Constellation Energy Group Inc., executives of the companies said.

Paris-based EDF, which agreed yesterday to buy a 50 percent stake in Constellation’s five existing reactors for $4.5 billion, wants to expand the U.S. UniStar Nuclear Energy partnership, Jean-Pierre Benque, senior executive vice president of EDF North America, said in a telephone interview.

UniStar intends to develop four Evolutionary Power Reactors by Areva SA, the largest atomic plant maker. Two would be added to Constellation plants in Maryland and New York. UniStar doesn’t have customers for the other two, Benque said.

“We would be very happy to have another partner join UniStar, and why not Exelon?” Benque said in the interview.

EDF, the world’s biggest nuclear-power producer, owns 58 reactors in France that produce 77 percent of the country’s power. Exelon operates 17 reactors. The company’s utilities supply power to about 5.4 million homes and businesses.

Exelon announced last month it was seeking a more proven reactor design after the GE Hitachi Economic Simplified Boiling Water Reactor it intended to use at a plant in Victoria County, Texas, placed it in the lower tier of U.S. Department of Energy preliminary rankings for federal loan guarantees.

Plant Ranking

The department ranked in the top tier Constellation’s planned expansion of its Calvert Cliffs, Maryland, plant with an Areva EPR, vice chairman Michael Wallace said yesterday in the same interview. Wallace said he has spoken regularly with senior Exelon executives about nuclear technology.

“Exelon is in detail aware of the EPR as well as the advantages and challenges that go with that particular technology,” Wallace said.

“We’ve had discussions with every vendor at some point,” Craig Nesbit, a spokesman for Exelon’s nuclear unit, said yesterday in an interview. “We’re evaluating them based on our decision not to use the ESBWR.”

EDF rose 2.5 percent to 43.33 euros s of 10:30 a.m. in Paris. Constellation yesterday slid 20 percent to $23 in New York Stock Exchange composite trading.

“Before any investor-owned utility in the U.S. would commit to building a reactor there needs to be an improvement in the credit markets,” UBS AG analyst Per Lekander said by telephone today. The U.S. along with the U.K. have “significant potential” for EDF, he noted.

Export Technology

EDF is building a 1,650-megawatt reactor in Flamanville, Normandy, which is seen as a gauge on whether it can export the technology. The utility earlier this month raised the price estimate of the plant by 20 percent to 4 billion euros ($5.76 billion) and said it intends to cut costs by producing future plants in series.

“Our teams will build Flamanville clones,” Chief Executive Officer Pierre Gadonneix said last week while touring the building site.

EDF’s determination to build French reactors in the U.S. figured in its decision to thwart a $4.7 billion takeover of Constellation by Warren Buffett’s MidAmerican Energy Holdings Co., Chief Financial Officer Daniel Camus said in the interview.

“These are very long-term projects. We felt maybe this could have been threatened in a different setting,” with MidAmerican as the owner of Constellation, Camus said.

EDF has said it wants to operate 10 EPRs by 2020 including four in the U.K. and two in China as well as at least one in France.

EDF will invest $1 billion in Constellation by purchasing preferred stock, putting up $600 million of backup financing and buying as much as $2 billion of other power plants if more cash is needed by a power-marketing business that’s been the U.S.’s largest, Baltimore-based Constellation said yesterday in a statement.

To contact the reporter on this story: Jim Polson in New York at jpolson@bloomberg.net; Tara Patel in Paris at tpatel2@bloomberg.net