News Release —September 15, 2005
Constellation Energy and AREVA Join Forces to Introduce
New and Unique Business Model for the Future of American Nuclear Power
Newly formed venture introduces unprecedented platform for nuclear power industry
WASHINGTON, September 15, 2005 –Constellation Energy (NYSE:CEG) and AREVA Inc., today announced the formation of UniStar Nuclear, a joint enterprise that provides the business framework through which the first fleet of advanced nuclear power plants in America in nearly three decades could be developed and deployed.
The UniStar Nuclear model brings together in one complete package, a preeminent nuclear reactor vendor and a deeply experienced nuclear fleet licensee, operator and owner. Specifically, UniStar Nuclear will offer the business framework that could enable the development of joint ventures with Constellation Energy, other energy companies and interested parties. Those joint ventures, in turn, would license, construct, own and operate nuclear power plants as part of a standardized fleet.
“With the recent passage of the Energy Policy Act, we now believe the time is right to build nuclear power plants in America,“ said Michael J. Wallace, executive vice president of Constellation Energy, president of Constellation Generation and co-chief executive officer of UniStar Nuclear. UniStar Nuclear is pioneering a new path that will help bring a new generation of nuclear power plants a major step closer to reality.
“We are taking a disciplined value-driven approach to creating and managing this new enterprise, which provides a new and unique business model for the nuclear power industry. By serving as a one-stop shop approach to design, build, license and operate a fleet of nuclear power plants, the UniStar approach provides an unprecedented level of certainty for energy companies and others contemplating new nuclear power plants,“ Wallace said.
UniStar Nuclear will market a standard advanced design called the U.S. Evolutionary Power Reactor (U.S. EPR), a 1,600-megawatt evolutionary power reactor designed for America by AREVA Inc.
“The U.S. EPR is the nuclear plant for America's future,“ said Thomas A. Christopher, chief executive officer of AREVA Inc., and co-chief executive officer of UniStar Nuclear. “Its basic design is mature, and the detailed design is now being completed. The design will be licensed and ready to deploy in America to help companies meet their demand forecasts for new power on the grid by 2015.“
More than 200 engineers are now working in support of the U.S. EPR design certification, which ensures development of a design that will allow energy companies to economically deploy advanced nuclear power plants that set a new standard for safety, efficiency and performance. AREVA has previously announced its plans for obtaining design certification for the U.S. EPR as a standard plant from the U.S. Nuclear Regulatory Commission.
“Our U.S. EPR nuclear power plants will be made in America by Americans for Americans - American engineering, American construction and many American components,“ said Christopher.
The U.S. EPR is based on AREVA's advanced nuclear power plant. Two reactors are to be built and operated in Europe with one already under construction in Finland. This ongoing plant construction experience provides a strong foundation for the U.S. EPR with real experience in constructing an advanced nuclear power plant. The design incorporates more than 40 years of nuclear power plant operating experience.
The U.S. EPR also represents a new standard in nuclear plant safety, with four separate safety systems, each of which is capable of performing the entire safety function for the reactor. AREVA, as prime contractor to any potential new nuclear project under the UniStar model, would provide the nuclear reactor and all support systems, instrumentation and control system and initial load of nuclear fuel.
The first fleet of four or more U.S. EPRs that could be developed and deployed under the UniStar approach would efficiently deliver the cost-effective, emissions-free power that is the foundation of America's economy and high standard of living. Energy companies, investors and consumers will benefit from their high-quality design and the operating efficiencies inherent in this fleet of standardized plants.
As currently envisioned, Constellation Energy would operate the proposed fleet of nuclear power plants and expects to hold the plant operating licenses. The company also would form joint ventures for each nuclear power plant. However, prior to identifying specific projects or committing to ordering new nuclear power plants, Constellation Energy's financial commitment will be limited to the formation of the business platform and business development activities.
AREVA and Constellation Energy also announced that Bechtel Power Corporation will support the project with its expertise as an architect-engineer and constructor.
“The combination of Constellation Energy, AREVA and Bechtel is the right team at the right time with the right technology,“ said Wallace. “We believe that the UniStar Nuclear approach will present such a strong value proposition for the energy industry that it will become a catalyst for a new generation of nuclear power in America. We look forward to sharing both our unique business model and the benefits of the U.S. EPR with our industry colleagues in the days and weeks ahead.
“The foresight and actions taken by the Bush Administration and Congress with the passage of the Energy Policy Act, have paved the way for today's announcement. By supporting nuclear power at a critical time, President Bush and Congress have helped secure America's energy future,“ Wallace added.
Today's announcement regarding the formation of the UniStar Nuclear venture also provides a unique and complementary path to the combined construction and operating license process efforts undertaken by the NuStart consortium, of which Constellation Energy is a founding member.
“Our new enterprise complements NuStart's verification of the capability of the Nuclear Regulatory Commission's combined Construction and Operating License (COL) process,“ added Wallace. “Although Constellation Energy has selected the U.S. EPR as its technology of choice, the company fully expects to continue to work within, support and learn from NuStart as it moves forward to refine the COL process.
“With the selection of the U.S. EPR as our technology of choice, Constellation Energy's Calvert Cliffs and Nine Mile Point Nuclear Power Plants are viable sites for possible future development through the UniStar Nuclear model, however, they are no longer appropriate for consideration as NuStart sites.“
UniStar Nuclear (http://www.unistarnuclear.com) is headquartered in Annapolis, Md.
Constellation Energy (http://www.constellation.com), a FORTUNE 200 company based in Baltimore, is the nation's largest competitive supplier of electricity to large commercial and industrial customers and the nation's largest wholesale power seller. Constellation Energy also manages fuels and energy services on behalf of energy intensive industries and energy companies. It owns a diversified fleet of more than 100 generating units located throughout the United States, totaling approximately 12,000 megawatts of generating capacity. The company delivers electricity and natural gas through the Baltimore Gas and Electric Company (BGE), its regulated utility in Central Maryland. In 2004, the combined revenues of the integrated energy company totaled $12.5 billion.
As the leading U.S. nuclear supplier and a key player in the electricity transmission and distribution sector, AREVA's 5000 American employees are committed to serve the nation and pave the way for the future of the electricity market. The company's commitment to America is reflected in its initial investment of $200 million in the U.S. EPR. With 40 locations across the nation and $1.8 billion in revenues in 2005, AREVA combines homegrown leadership, access to worldwide expertise and a proven track record of performance. In the U.S. and in over 100 countries around the world, AREVA is engaged in the 21st century's greatest challenges making energy available to all, protecting the planet and acting responsibly towards future generations. AREVA Inc. is headquartered in Bethesda, Md. Visit us at www.us.areva.com.
Bechtel Power Corporation is a global engineering, construction and project management company that builds fossil and nuclear power plants. Bechtel has worked on more than 150 nuclear plants around the globe and has provided engineering and/or construction services to more than 50 percent of the 103 operating U.S. nuclear power plants. Bechtel has been rated the #1 overall contractor in the United States and the #1 power contractor by Engineering News Record magazine each year for the past seven years. Privately owned with headquarters in San Francisco, Bechtel has 40 offices around the world and 40,000 employees. The company had revenues of $17.4 billion in 2004. It has been the No. 1 ranked U.S. contractor seven years running.