EDF Puts U.S. Nuclear Expansion Plans on Hold, Increases French Production
Electricite de France SA, the biggest operator of nuclear reactors, put on hold a plan to develop atomic plants in the U.S. while domestic plant availability improved at the lower-end of a targeted pace.
EDF is reviewing its business in the U.S. and supply contracts for developing a reactor, Thomas Piquemal, chief financial officer, said today on a conference call. “When we have a better visibility on the regulatory environment and price evolution, we will be in a better position to see whether we go ahead with U.S. projects.”
EDF agreed last month to pay about $249 million partly to buy out Constellation Energy Group Inc. from a venture to develop EPR reactors in the U.S., including one in Maryland. Slumping power prices has cut the value of three U.S. atomic plants that the two utilities own together and forecasts of sustained low prices prompted Constellation to withdraw from talks on a government loan guarantee for the Maryland reactor.
The Paris-based company will search for a new “industrial partner” for the venture it had with Constellation and push for a loan guarantee for the reactor, Piquemal said. The utility in July took a provision of 1.1 billion euros ($1.5 billion) on its holding in Constellation amid a “less favorable” outlook for power prices and the planned reactor at Calvert Cliffs, Maryland.
Sales Rise
The accord with Constellation “won’t lead to any more provisions,” Piquemal said, adding that EDF will provide details when it releases full-year earnings.
The company today reported sales in the nine months through Sept. 30 rose to 52.9 billion euros from 48.4 billion euros a year earlier. The state-controlled utility kept its full-year growth target for earnings before interest, taxes, depreciation and amortization of 3 percent to 5 percent and for a stable dividend. EDF said the net debt-to-Ebitda ratio will be “close” to 2.5 percent, the lower end of a 2.5 percent to 3 percent range because of higher-than-expected proceeds from asset sales, including from the sale of its U.K. grid.
EDF plans to provide medium-term financial targets next year when full-year results are published. An update on U.K. operations will be given Dec. 17.
French nuclear output rose 9.2 terawatt-hours to 299 terawatt-hours, “consistent with the nuclear output objective for the year” of 405 terawatt-hours to 415 terawatt-hours, the operator of France’s 58 nuclear reactors said.
Piquemal said the company targets a full-year nuclear plant availability rate of “close to” 78.5 percent, at the “low end of the target” because of unplanned halts in October. He said in May that the company wanted an improvement of “at least” 1.5 percentage points this year from last year’s 78 percent.
Situation Improving
Chief Executive Officer Henri Proglio pledged to raise French nuclear output in 2010 to boost profitability and reach a target of making 85 percent of the reactors available for electricity production by 2015.
“Management reiterated its medium-term guidance for 85 percent availability but highlighted that there shouldn’t necessarily be an annual linear progression,” Citigroup analyst Sofia Savvantidou said in a note to clients today. There could be “downward pressure” on the bank’s forecast of EDF reaching 80.3 percent next year, she wrote.
“The situation in France is improving,” Piquemal said. EDF has 10 reactors halted, compared with 16 at the same time last year, he said.
EDF plans to halt nine French reactors in 2011 for in-depth inspections, 50 percent more than the average in recent years. These halts take about 100 days and will shave 1.5 percent off the availability, Piquemal said.
EDF is in talks with Areva SA on strengthening their industrial partnership, Piquemal said. “An eventual increase in our stake in Areva can only be done in light of this industrial partnership.”
The French state holds an 84.8 percent stake in EDF, which has a 2.4 percent stake in Areva.
To contact the reporter on this story: Tara Patel in Paris at tpatel2@bloomberg.net
To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net