Bills seek a prepaid coal plant

Tampa Electric wants consumers to pay up front for its pricey coal-gasification plant in Polk County.

By Steve Huettel, Times Staff Writer
Published March 29, 2007

Tampa Electric wants customers to start paying for a proposed "clean coal" plant in Polk County years before it cranks out the first watt of power.

Bills in the Florida Legislature would let the utility pass through costs for design, licensing, construction and interest for the $1.5-billion plant once building begins, likely in 2009.

State rules don't allow utilities to add those costs to customers' bills until a new plant begin operations, but Progress Energy Florida won an exception from the Legislature last year for a nuclear plant it plans to build in Levy County.

Tampa Electric is looking to piggyback onto the same law for its new coal plant, which has the potential to eliminate emissions of carbon dioxide, a greenhouse gas tied to global warming.

The coal-gasification plant, which costs up to 15 percent more than a conventional coal plant, is a massive financial undertaking for the company.

Early cost recovery would reduce the company's risk. Without the help, Tampa Electric would need to borrow so much it could hurt the company's credit rating and kill the project, says president Chuck Black. "We don't believe we could pull it off," he says.

By 2013, the utility needs to find a new "base load' generation - plants that run around the clock - to meet growing demand.

Tampa Electric's fallback plan is adding generators that burn natural gas. While the plants are relatively cheap to build, natural gas costs more than coal and is prone to sudden price spikes.

Building and operating a coal-gasification plant would cost $7-billion less than a gas-fired plant over the first 25 years, Tampa Electric estimates. The plant would generate enough electricity to power about 170,000 homes, the utility says.

So far, bills introduced by Sen. Mike Bennett., R-Bradenton, and Rep. Tray Traviesa, R-Tampa, have sailed through two Senate and three House committees without a single vote in opposition.

Tampa Electric built its first coal-gasification plant in Polk County, one of only two in the United States, about 10 years ago.

The process turns coal into a cleaner-burning, synthetic gas that generates electricity like natural gas. The new plant is planned for the same site, about 60 miles southeast of Tampa.

Tampa Electric expects to design the facility with technology that captures carbon dioxide and stores it underground in a "saline" aquifer. TECO has received $133-million in tax credits from the federal government to help pay for the project.

The legislation gives Tampa Electric other advantages. State utility regulators wouldn't have to consider alternative plant proposals from other power companies to provide the utility's base-load needs.

Tampa Electric also wouldn't need to show "extraordinary circumstances" to increase initial cost estimates for the plant.

Steve Huettel can be reached at huettel@sptimes.com or (813) 226-3384.