The New York State Public Service Commission has approved the $4.5 billion acquisition of 49.99% of Constellation Nuclear, the indirect owner of three nuclear power plants in upstate New York, to a wholly-owned subsidiary of Electricite de France, the world’s largest nuclear power plant owner.
In the USA, EDF Group and Constellation Energy have an existing partnership through their UniStar joint venture to build, own and operate new nuclear generation.
With the New York power plant acquisitions, EDF’s subsidiary EDF Development, Inc will own the 621 MW Nine Mile Point Nuclear Unit I and the 1,135 MW Nine Mile Point Nuclear Unit II in Oswego and the 582 MW R.E. Ginna Nuclear Power Plant in Ontario, Wayne County.
Constellation also owns the Calvert Cliffs NPP in Maryland. EDF also needs Maryland state approval to proceed with the deal. Evidentiary hearings were due to take place on April 27-8; a report is due by June 8. EDF chairman and CEO Pierre Gadonneix said that EDF's "immediate focus on breaking ground for Calvert Cliffs Unit 3 as soon as the regulatory process allows, perhaps as early as 2009,” he said in a company statement in 2008.
Public Service Commission documents show that the deal comes after Constellation cancelled its proposed acquisition by MidAmerican Energy Holdings in September 2008.
As part of the deal, EDF is giving Constellation $1 billion immediately by buying newly-issued, non-voting, non-convertible preferred stock. It will also offer $600 million of short-term debt finance. The documents also said that CEG had financial difficulties in autumn 2008.
After the closing of the transaction, CEG and EDFD will each appoint five members to a new board of directors for Constellation Nuclear, with a deciding vote on matters related to safety, security and reliability of electric operations reserved to Constellation Nuclear’s Chairman, who must be a U.S. citizen. EDFD’s parents are also limited to acquiring no more than 9.9% of the outstanding shares of CEG’s stock.
The Commission found that no potential for harm exists in this transaction in regards to the Commission’s Wallkill presumption, under which transactions involving parent entities upstream from the entities owning wholesale electric generation facilities located in New York must be reviewed if there is the potential for the exercise of market power or other harm to the interests of captive New York ratepayers.
Because EDF is a new entrant into New York generation markets, and is acquiring only interests already held by Constellation Nuclear, market concentration in New York wholesale generation markets will not increase as a result of the transaction. Furthermore, the transaction does not pose the potential for the exercise of vertical market power or other impacts adverse to the interests of captive ratepayers, the commission found.
Parent company Constellation Energy Group, based in Maryland, will retain a majority interest in Constellation Nuclear, which will remain the indirect owner of the Nine Mile and Ginna nuclear facilities.
Electricite de France (EDF), through the subsidiary, is acquiring a 49.99 percent ownership interest in Constellation Nuclear. EDF, owned primarily by the French government, is the leading electric utility in France, where it owns and operates approximately 98,000 megawatts (MW) of its worldwide 124,500 MW in generating capacity.
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