Nuclear savings, but at a price

By HELEN HUNTLEY
Published December 15, 2006

---

Plans for a new nuclear power plant in Levy County, unveiled by Progress Energy Florida this week, would carry a huge price tag should they come to fruition - at least $2.5-billion for a single reactor plant and more than $5-billion for a dual-reactor plant. How will it be paid for? How does an extra $2 to $4 a month on your electric bill sound for starters? Chief executive Jeff Lyash addressed that issue in a conversation with the St. Petersburg Times editorial board Thursday. These answers are based on his statements.

Will the company have to borrow money?

Financing likely will be a roughly 50-50 split of equity (money raised by selling new shares of stock) and debt.

Will customers be asked to pay some of the cost in advance?

A new law allows utilities to recover costs such as licensing and interest as money is borrowed. An application for a rate increase could come as soon as two years from now even though it could be 10 years before the plant is producing electricity. The amount of the customer charge would be reviewed annually.

How much would bills go up?

Probably $2 to $4 a month for a typical residential customer.

Obviously that helps the company. Does it help the customer, too?

Because nuclear fuel is cheaper than alternatives, bills should go down once the plant is completed. Theoretically, the savings should allow customers to recover their upfront costs in about six years. However, that depends on prices for various fuels.

We've talked about recovering interest; what about principal?

That's considered an investment by Progress Energy shareholders.

The company will be allowed to earn a return on that investment, which will be reflected in higher rates down the road, offset to at least some extent by the lower fuel costs.

Who will build the plant?

Most likely Westinghouse or General Electric.