Utility looks to split atoms
Tampa Electric is interested in a share of Progress Energy's planned nuclear reactors.
By ASJYLYN LODER, Times Staff Writer
Published March 8, 2008
Wanted: half a nuclear plant.
Tampa Electric wants nuclear power, but can't afford a plant of its own. Progress Energy plans to build two reactors and might be willing to share.
A match? Maybe.
Top executives at both companies expressed willingness to partner on nuclear power. Such partnerships may well define the "nuclear renaissance," as small utilities look for low-carbon energy, and nuclear utilities look to share the expense.
"It's a good mix for us," said Chuck Black, president of Tampa Electric. "It helps us with our fuel diversity, and it will be a key piece of the future in a carbon-constrained environment."
Black said he'd be interested in buying 400 to 600 megawatts. Progress Energy's Levy County plans call for two 1,100-megawatt reactors.
Progress Energy appears amenable to sharing the risks.
"As we progress toward new nuclear, I think you're going to see a lot more arrangements on joint ownership, joint ventures, new financing sources," Bill Johnson, CEO of Progress Energy's parent in North Carolina, told financial analysts in Orlando last week. "We're looking at all of those options."
Progress Energy Florida has held preliminary discussions with small utilities throughout the state, said spokesman Buddy Eller. The St. Petersburg utility already shares ownership of about 9 percent of its Crystal River nuclear plant with nine small utilities.
Utilities throughout the state also want a piece of two reactors that South Florida-based Florida Power & Light plans to build 25 miles south of Miami, according to filings with state regulators.
"It makes a lot of sense," said Daniele Seitz, industry analyst with Dahlman Rose & Co. in New York. "It will be very difficult for any company - especially for ones that aren't among the 10 largest - to finance a unit that will cost at least $5-billion apiece."
A share in nuclear power solves several problems for Tampa Electric, which is part of TECO Energy. The utility gets more than half of its power from coal. Coal is cheap, but heavy on greenhouse gases. New rules could force the utility - and its customers - to pay heavily for those emissions. Fearing just that, Tampa Electric quashed plans last year for a $2-billion new coal plant.
Killing the coal option forced Tampa Electric to rely more on natural gas. Natural gas burns cleaner, but costs much more and remains vulnerable to disruption, as hurricanes have painfully demonstrated.
But what will nuclear cost? Progress Energy originally estimated that one new reactor would cost $3-billion. But rising prices for steel, cement and specialty metals have pushed that up. The utility declined to offer new estimates before it files for approval with state regulators, which could happen as early as next week.
Further south, Florida Power & Light estimated it would cost $12-billion to $18-billion to build a two-reactor project like Progress Energy's.
"There's some limit to what Tampa Electric could afford, but I'm not sure I know what that limit is at this point," Black said. "I feel pretty confident that Tampa Electric could handle a $2-billion investment, and pretty confident that we could not handle a $6-billion investment, so where in-between that we might fall, I don't know that yet."
Asjylyn Loder can be reached at aloder@sptimes.com or (813) 225-3117.