18 September 2008

When lending institutions are on shaky ground...The financial implications of this might be something y'all - all over the country - can use as a talking point.

How can these power firms, after all, pour $6 to $10 billion into these reactor construction deals if the financial institutions that back their financing are anything but rock solid?

Read and think carefully about the role that Maryland's Public Service Commission might be "pressured" to undertake. If this happens here in Maryland, could it not happen in other states as well? I suspect Maryland could set the precedent for the entire nation, with our states' public utility commissions acting as nuke-pushing enablers - even going so far as to waive regulatory processes (!) for these nuke firms.

This "Nukuler Resurgence" is merely a game of dominoes. If Calvert Cliffs goes on board with AREVA's [i.e., EDF, think French government] new double-size, un-tested, un-proven, EXPERIMENTAL EPR design*? The rest of the nuke construction applications are surely to follow, right down the line.

The President's 2005 visit to the initial birth place of this "Nukuler Resurgence," his "pet nuke," Calvert Cliffs Nuclear Power Plant, which sits on (and, tragically, dumps contamination into) the Chesapeake Bay, just 50 miles outside Wash, DC is likely to set the stage for the other 33 new reactor applications (and more on the horizon) to slide greasily on down the approval process, exactly like a game of dominoes.

So this is why I keep harping on the Calvert Cliffs nuke expansion under consideration by the Maryland Public Service Commission. The power plant owner, Constellation Energy, (i.e., UniStar's baby) is in trouble even hotter than its radionuclide-laden, thermal discharges into the Chesapeake Bay. This is why, if this first nukuler "experiment" can be stopped? The other reactor construction deals are then less likely to experience smooth, easy sailing in their funding and approvals processes.

Stopping the initial nuke reactor construction at Calvert Cliffs is, therefore, absolutely CRITICAL. If this administration's first nukuler "baby" slides on through? We are then far more likely to see a rampant free fall of the rest of the nation's nukuler construction approvals.

See www.safeenergymd.com for more details and to find out how you can help stop the Calvert Cliffs nukuler expansion - the very first in a series of the most deadly game of dominoes this nuked-out nation's ever known.

*EPR experimental test concept courtesy Bob Nichols

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Constellation in talks to sell out
DANIELLE ULMAN
Daily Record Business Writer
September 17, 2008 7:42 PM

Constellation Energy Group Inc. has entered “advanced stage” sale talks, Standard & Poor’s said Wednesday, clarifying a statement by the energy company that it has engaged in discussions with potential strategic partners.

The Baltimore-based company said Wednesday morning that it has retained Morgan Stanley and UBS to “evaluate strategic alternatives,” a phrase often associated with searching for a buyer, merger or acquisition.

“You could likely interpret it that they’re going to assess the market’s valuation on part of the business, so they’re going to review if there are parts of the company that they could sell,” said Paul Justice, an analyst with Morningstar Inc. in Chicago.

Constellation has lost nearly 58 percent of its value since Monday, when Lehman Brothers Holdings Inc. filed for bankruptcy, and investors feared the company’s credit relationship with the fallen investment banking house would have negative consequences.

Constellation has issued two statements since Monday to clear up uncertainties about its ties to Lehman — a $150 million credit line out of the $6.13 billion Constellation has in credit — and quell analyst chatter about the possibility that the company would lose its $2 billion line of credit. Rob Gould, a Constellation spokesman, said the company would not comment beyond its statements.

Constellation’ s shares rallied Wednesday morning, after the company disclosed potential sale plans and eased analysts’ liquidity concerns, but the recovery ended quickly.

Shares closed Wednesday down $5.99, or 19.5 percent, to $24.77.

S&P placed Constellation’ s credit rating on watch as the company is “facing an acute crisis of confidence that has resulted in a decline in its stock price,” which triggered a downward spiral to $16.60, short of the company’s 52-week low of $13 reached on Tuesday.

A downgrade from its “BBB” rating would compel the company to raise more money; Constellation would need $681 million in collateral if it fell to “BBB-,” or $3.37 billion if got downgraded to junk status, according to a research note by Citigroup.

S&P suggested that it would reconsider Constellation’ s rating if the company gets an equity infusion, sustains availability of the $2 billion credit line and completes an asset sell-off or sells the entire company.

“In the absence of rapid execution of these credit supportive actions, a multiple-notch downgrade is likely,” S&P said. “We do not expect the company to withstand such a rating action.”

Paul B. Freemont, an analyst with Jefferies & Co. in New York, said in an interview with Bloomberg News that Constellation will have many regulatory hoops to jump through if it decides to sell.

“I don’t believe that even if they were to announce the sale of the company that they would be able to implement that for a year’s time, because you have regulatory approvals at the state level, the Federal Energy Regulatory Commission and the Nuclear Regulatory Commission,” he said. “Unless somebody is able to figure out a way to bypass all of those regulatory gates, which historically have taken well over a year, Constellation may not survive to essentially merge with another company.”

Like S&P, Freemont said Constellation’ s situation is urgent.

“Constellation’ s problem is one that they need to resolve now,” he said. “They can’t wait a year to get regulatory approvals for a merger.”

A deal would likely go through the Maryland Public Service Commission, which regulates utilities like Constellation’ s Baltimore Gas & Electric Co.

“Because a transaction may, under Maryland law, require approval by the commission, the commission cannot comment on these matters,” said LaWanda Edwards, PSC spokeswoman. “The commission would give any filing appropriate consideration in light of the current environment and the best interests of Maryland citizens.”

In 2006, the state legislature blocked FPL Group Inc.’s proposed $12.4 billion takeover for Constellation.

Last week, Electricite de France SA, France’s state-controlled power company, increased its holding in Constellation from 4.97 percent to 9.51 percent, in what analysts said was a show of support for the local firm. EDF is Constellation’ s largest shareholder.

CEO Mayo Shattuck III said in July that Constellation had begun looking for companies to partner with on its wholesale energy business. In August, Constellation said it would sell its upstream gas assets and perhaps its international coal/freight business. S&P said without the confidence of potential partners, those opportunities would be limited.

Morningstar’s Justice said Constellation’ s lack of transparency would not help.

“It’s difficult to assess what their counterparty risk is in their trading book,” he said. “Given the lack of visibility to the market of their trading book, you don’t really know what’s going on inside, it’s sort of like a black box.”

Constellation’ s shares have lost 77 percent of their value since January, when they hit a 52-week high of $107.97.

http://www.mddailyr ecord.com/ article.cfm? id=8598&type=UTTM

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Help the US become Radiation Free by 2033!
www.radiation.org

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Cathy Garger is a freelance writer, antiwar and anti-radiation activist, and a certified personal coach. Living in the shadow of the national District of Crime, Cathy is constantly nauseated by the stench emanating from the nation’s capital during the Washington, DC, federal work week. Cathy can be contacted at savorsuccesslady3@yahoo.com

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Cathy Garger: /garger/
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