Progress Energy nuclear plant delayed by at least 20 months

May 01, 2009

Progress Energy’s $17 billion nuclear project has been delayed by 20 months, but its customers will continue to pay for it in their monthly electric bills.

The utility wants to start charging customers nearly twice as much next year for the Levy County project even though it won’t start producing power until March 2018 at the earliest, the St. Petersburg utility announced Friday morning. The delay may also increase the price of the project, but the utility won’t know the details until later this year.

Jeff Lyash, president and chief executive of Progress Energy Florida, defended the utility’s decision to continue to charge customers for the plant. The investment will save customers money in the long run, he said. Without it, the project will likely fail.

“Nuclear is critically important in helping us hit the right balance with fuel diversity, security, greenhouse gas reductions and it’s in the best interest of our customers,” Lyash said.


The utility has faced populist outrage this year against its rising rates. In January, its customers saw a monthly increase of $11.42 per 1,000 kilowatt hours to pay for nuclear projects, part of an overall 24 percent increase.
Customers rebelled, flooding their legislators with angry phone calls. Some lawmakers threatened to reverse the 2006 law that allowed utilities to bill customers for the early costs of building a nuclear power plant, years before the plant starts producing electricity.

Fearing that the threats could lead to a repeal of the law, and out of deference to the state’s financial straits, Progress Energy took a step backward. The utility lowered its rates, reducing the monthly nuclear charge to $3.62 per 1,000 kilowatt hours. Now, the utility wants to raise that charge to $6.69 per 1,000 kilowatt hours. A small portion of the charge pays for upgrades at the existing Crystal River reactor, but most of the money pays for the Levy County project.

Sen. Mike Fasano, R-New Port Richey, said Friday, “It really amazes me how shameless Progress Energy is. They have no consideration for the customer. None whatsoever. They can talk all they want about how they want to put the customers first. They have yet to put the customer first when it comes this issue.”

Fasano voted in favor of the legislation in 2006, but said he feels differently about it today. He said he wants to see the early charges for the plant suspended.

“We have already now nuclear power plants that, when they were brought to the legislature a few years ago, the cost was going to be half of what it is now. With further delays, the cost will increase. Unfortunately, it is going to be the customer that is going to pay for that.”

Fasano said that there are no guarantees that there won’t be more delays and ballooning costs. Customers should not have to bear that risk, he said.

Delays and cost overruns derailed the nuclear industry in the 1970s and 1980s, leading to a 30-year break in new plant construction. This time, the industry worked with federal regulators to streamline the years-long licensing review process. Instead of power plants that differed from project to project, this time energy companies would pick from a handful of standardized “off the shelf” designs. Instead of two licenses from the Nuclear Regulatory Commission — the first to build, the second to operate — the utility would get one combined license. The industry promised that the changes would speed projects along, and forestall the multi-billion dollar boondoggles of decades past.

However, there are early signs that all is not going smoothly. This week, the NRC said that its review of the Westinghouse AP1000 — the reactor design picked by Progress Energy, Florida Power & Light and four other energy companies -- is running 15 months behind schedule. The NRC estimates that its review will be complete by August 2011. Without approval of the design, Progress Energy and the other energy companies can not get their licenses to start construction.

The NRC said the delay in the reactor review is not expected to significantly delay plans for the seven projects that plan to build the AP1000 reactors. Adrian Heymer, director of strategic programs at the Nuclear Energy Institute, an industry trade group, agreed. From here on out, though, the NRC must maintain its schedule or risk delaying construction of several projects, each worth billions of dollars.

“I think moving out from now on everything has to mesh perfectly,” Heymer said.

On Friday morning, Progress Energy announced another hitch. The utility had hoped to begin excavation and site preparation below the Levy County nuclear site before the NRC granted its license. However, the NRC said Progress Energy would have to wait until the license is granted, which is planned for January 2012.

If the review of the AP1000 takes longer than anticipated, or if Progress Energy’s license runs into further delays, construction would likely be pushed further back.

Lyash said that work on the Levy County project continues. The utility will continue to spend money on licensing, permitting, and the transmission lines needed for the power plant. The utility can also continue to order long lead-time components, and build a barge slip and heavy haul road to bring equipment to the site.

“The project is not stopping,” he said.

So far, Progress Energy said it has invested $389 million in the Levy County project, and that approximately $80.5 million has been collected from customers.

-Asjylyn Loder, Times Staff Writer

http://blogs.tampabay.com/energy/2009/05/progress-energy-nuclear-plant-delayed-by-at-least-20-months.html