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Price triples for Progress Energy's proposed nuclear plant in Levy

Progress Energy's planned plant costs $17-billion.

By Asjylyn Loder, Times Staff Writer
Published March 11, 2008

Progress Energy tripled its estimate for its new nuclear power plant in Levy County, saying Monday that the new price is$17-billion.

Customers could start paying for it next year, with the average residential customer facing an increase of about $9 a month.

"You can't avoid the notion that nuclear has an upfront cost for the customer," said Jeff Lyash, president and chief executive of Progress Energy Florida. "It does."

Gov. Charlie Crist said he'll continue to support nuclear power. It will make a critical contribution to the state's fuel diversity and energy independence, he said. It's worth the rising cost.

"I think this is an investment in Florida's future that is important to make," he said Monday. "It will ultimately result in lower costs for customers because of the rising costs of oil and natural gas."

New nuclear will pay off, Lyash argued. Without it, customers would end up paying an additional $1-billion a year for fuels like natural gas. Fossil fuels would end up providing 85 percent of the utility's electricity within a decade. Greenhouse gas emissions would continue to rise.

With nuclear, fuel will be cheaper, reliance on fossil fuel will wane, and greenhouse gases will decline, Lyash said.

The St. Petersburg utility plans to give more details to state regulators today, including how the plant will impact monthly bills. Under Florida law, Progress Energy can start to bill customers for financing and preconstruction costs years before a new plant goes into service.

Lyash estimated that the customers' monthly bills will increase an average 3 percent to 4 percent a year over the next decade but are expected to spike as construction intensifies.

Despite Lyash's assurances, the new price could leave some with sticker shock. The number will reverberate throughout the Southeast, where at least five similar projects have been announced. Utilities have said that surging prices for commodities like steel and concrete have driven up the cost of new nuclear, but Progress Energy is the first to offer a firm estimate.

In recent weeks, the much vaunted "nuclear renaissance" has shown signs of weakening, as the rising price erodes support. South Carolina Electric & Gas, along with two subsidiaries of Southern Co., have already delayed their plans. In January, a utility pulled the plug on a planned nuclear plant in Idaho.

"We're seeing some of the utilities backing off," said Stephen Smith, executive director of the Southern Alliance for Clean Energy.

Lyash emphasized that Progress Energy has not yet decided to build a new nuclear plant in Florida. The utility decided to go ahead with its application to state regulators today because it still believes that nuclear is the best option in terms of cost and environmental impact, Lyash said.

The utility paid more than $80-million for 5,200 acres in Levy County, about 10 miles north of its Crystal River power plant. It plans to build two Westinghouse AP1000 reactors, with a capacity of 1,100 megawatts each.

Smith says that costs could continue to balloon, even as lower cost options like energy efficiency get passed by, and that politicians need to reassess their support before customers start paying for it.

"Until the state of Florida has really squeezed every last drop that it can out of energy efficiency, the state of Florida needs to think about giving utilities access to customers' pocketbooks to pay for these massive construction costs," Smith said.

The nuclear industry disagrees.

"I think no matter what technology you select, there's going to be sticker shock," said Adrian Heymer, senior director of new plant deployment with the Nuclear Energy Institute, an industry trade group. "The customer needs to look at the long term: If you don't choose nuclear, what are you going to choose?"

Times researcher John Martin contributed to this report. Asjylyn Loder can be reached at aloder@sptimes.com or 813 225-3117.

New nuclear prospects in Florida

What happened?

Progress Energy asked state regulators for permission to build two new nuclear reactors in Levy County. The utility also announced a new price of $17-billion, tripling the estimate offered a little more than a year ago.

Why did prices go up?

The cost of commodities like steel and cement have increased substantially, pushing up the cost of any power plant. Progress Energy's new estimate also includes a $2-billion to $3-billion transmission project, as well as the cost of land, financing, labor, fees and fuel. Early estimates didn't include those costs, the utility said.

What are the other options?

Worries over greenhouse gases have killed new coal projects in Florida. The backup plan is natural gas, which is very expensive and subject to wide price swings. New greenhouse gas regulations could also add to the cost of burning fossil fuels. Nuclear power emits no greenhouse gases, and the fuel is relatively inexpensive.

What's next?

The Florida Public Service Commission has scheduled three days of hearings starting May 21. Progress Energy will also have to file a site certification application with the Department of Environmental Protection and a license application with the federal Nuclear Regulatory Commission. The utility plans to file both of those applications this year. The federal licensing application could take two to three years. Progress Energy wants to have the first reactor on line in 2016, and the second completed the following year.

Source: Progress Energy Florida

[Last modified March 10, 2008, 23:51:26]