Warren Buffet snaps up US nuclear player

An applicant for a new nuclear reactor in Maryland was last week purchased by a subsidiary of Warren Buffet's Berkshire Hathaway group.

Constellation Energy Group agreed to sell all its outstanding shares to Buffet's MidAmerican Energy Holdings Company (MEHC) in a deal worth $4.7bn in cash and $1bn in stock.

Constellation had applied to the Nuclear Regulatory Commission to install a third reactor at its Calvert Cliffs, Maryland, nuclear power plant. The application was lodged along with Unistar Nuclear Energy, a joint venture with French reactor builder EDF, which had also been expected to purchase Constellation.

A final environmental impact statement was due to be issued to the Environmental Protection Agency in March 2010, after which a mandatory hearing and decision on the licence would have been conducted.

Berkshire Hathaway is a cash-rich company, and will acquire five reactors providing roughly 3.7 per cent of the United States' nuclear energy capacity through the deal. MEHC president Gregory E. Abel praised Constellation's " premier fleet of nuclear assets".

However, in January MEHC subsidiary MidAmerican Nuclear Energy Company, which was set up to analyse the economic viability of nuclear energy, essentially dismissed nuclear as an option in Idaho. It decided not to proceed with a nuclear reactor there, citing economic considerations. "The company's due diligence process has led to the conclusion that it does not make economic sense to pursue the project at this time," it said in an announcement.

"When Warren Buffet looked at building new nuclear plants in Idaho, they dropped it like a hot potato," said Paul Gunter, director of the reactor oversight programme at non-profit anti-nuclear group Beyond Nuclear.

Gunter questioned the viability of nuclear power projects - which were promised some support under the Energy Policy Act of 2005 - in the current financial climate. Other critics have noted that Constellation was tied financially to Lehman Brothers Holdings - a fact which resulted in a slump in its share price ahead of last week's takeover.

Constellation Energy Group did not return calls on Friday asking about the reactor's future.

Nuclear power is undergoing something of a renaissance in the US, where both presidential candidates have signalled that it will form a key component of their strategies for curbing carbon emissions.