Energy utility Constellation Energy Group Inc.(CEG) offered to dispose its interest in a Maryland nuclear power plant to its French partner Electricite de France at the bargain price of $1. However, Constellation will ask its French partner to reimburse expenses of $117 million, which the company had incurred while developing the nuclear asset.
With a view to constructing the third nuclear reactor at Constellation’s Calvert Cliffs plant in Maryland, the companies entered into a joint venture to form UniStar. Constellation decided to back out of the joint venture citing higher construction costs and a fall in the prices for natural gas that dampened the prospects of the project. Constellation’s lack of interest in the project was more evident when it decided to drop its application for a federal loan guarantee of $7.5 billion.
Electricite de France expressed its willingness to continue with the project without the support of Constellation as the former is interested in business operations in the U.S.
The adjusted earnings of Constellation Energy at the end of second quarter 2010 were 71 cents per share compared with $1.08 in the year-ago quarter. The company reaffirmed its 2010 earnings guidance range of $3.05 to $3.45 per share and its 2011 guidance range of $3.25 to $3.65 per share. The Zacks Consensus Estimates for fiscal 2010 and 2011 are $3.22 and $3.43 per share, respectively.
Constellation Energy currently retains a Zacks #3 Rank (short-term Hold rating). The peers are Allegheny Energy Inc. (AYE), American Electric Power Co. Inc (AEP) and Duke Energy Corporation (DUK). On a competitive basis, the net income of the company was better than its peers in the trailing twelve months.
Electricite de France is a leading operator in the energy markets in Europe. This integrated energy company is involved in the business of production, transport, distribution, selling and trading.
Based in Baltimore, Maryland, Constellation Energy supplies energy products and services in North America. The company operates in three segments: Merchant Energy, Regulated Electric and Regulated Gas.
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