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Venture

Robert Trigaux

In nuclear power planning, a growing case of the blind leading the blind

10

February

levypowerplantnukerendering.pngWake up and good morning. Florida's nuclear power future may be as clear as mud but there are big wheels turning in this state and elsewhere that involve nukes, Florida power companies and consumer rates you should know about.

Here are two related examples:

1. The Jacksonville Electric Authority (JEA), the municipal power company supplying electricity to northeast Florida, says it agreed to pay $7.5 million for an option to become part-owner of Duke Energy's proposed Lee nuclear power plant near Gaffney, S.C. Why? JEA will have the option to spend about $2 billion for 400 megawatts of annual capacity after it signs the $7.5 million option. The 2,234-megawatt Lee nuke is expected to begin running in 10 years (and we know nuke plants are never delayed or mothballed, right?). Last summer. JEA's board decided to increase the amount of its electric grid powered by nuclear power from 10 percent to 30 percent by 2030. JEA has a deal to power about 10 percent of its electric grid using electricity bought from the yet-to-be-built nuclear plant near Waynesboro, Ga., when it goes online in 2018. Read more in the Charlotte Observer story here and the Jacksonville Business Journal story here.

Okay. A little perspective. Duke Energy is buying Progress Energy, which includes Progress Energy Florida which has increasingly vague plans to build a two-reactor nuke plant in Levy County (shown above in proposed rendering) north of Tampa. And yet Florida's JEA is not buying an option of the proposed Levy plant in its own state but instead opting for a piece of a South Carolina nuke plant that won't start operating for a decade at best. Figure that one out....

And yet we just reported in the Venture blog here that another municipal power company, the Orlando Utilities Commission, may invest in nuclear power plants built in South Carolina and, by so doing, somehow deliver electricity to Orlando residents imported from nukes proposed for a site 450 miles and two states away.

And even Tampa-based TECO Energy has expressed interest in investing in a nuclear power plant in order to diversify its sources of electricity going forward.

So let me get this straight. Progress Energy Florida -- soon to be owned by Duke Energy -- is fretting over the costs of a proposed Levy County nuclear power plant and wants to jack up the rates charged its customers to cover more of the plant's costs. And yet here are examples of three viable power companies in Florida -- all of which are hunting for stakes in nuclear power, with two of them already preparing to plunk down big bucks on South Carolina nuke projects (including one owned by the same company Progress Energy Florida will belong to).

(Progress Energy Florida customers pay $119.34 per 1,000 kilowatt hours of electricity, Progress Energy North Carolina customers pay $102.19 and Duke Energy North Carolina customers pay and $92.99.)

What's wrong with this picture?

2. While this seemingly game of inefficient chess is under way, we learn that a coalition of more than a dozen groups that includes environmentalists, nuclear critics, N.C. Justice Center and AARP want to keep North Carolina from adopting a nuclear policy -- let's call it the let's charge our customers higher rates as needed to build new nuke plants policy -- that's already in place in not-so-clever Florida, South Carolina and other states.

As reported in the Raleigh News & Observer, the groups have placed full-page newspaper ads to warn that North Carolina's power companies "are gambling on nuclear projects that could experience cost overruns and end up abandoned, as happened more than 60 times in the 1980s. The AARP also sent a mailer to more than 100,000 members in the state last week, characterizing the proposal as a blank check that will lead to certain annual rate increases."

mikefasanoflsen.jpgThe Observer says the groups have been encouraged by Florida's Republican state Sen. Mike Fasano (photo, right), who is seeking to repeal a similar law in the Sunshine State. That state's law results in an extra $5 a month on a typical residential bill for Progress Energy's Florida customers. (By the way, that's an extra charge to pay for a Levy plant that Progress Energy no longer is even sure it will build.)

Keep in mind North Carolina politics. The Republican-controlled legislature faces lobbying by two giant power companies: Duke, based in Charlotte and Progress Energy based in Raleigh -- that will soon merge to become the biggest power company in the United States. Good luck to the coalition trying to stop that electric rate policy train.

It's especially troubling to read this typical exchange in the Observer story:

"The change Progress and Duke are seeking would let utilities raise rates to pay off the interest on their debt. The principal would not be paid until the nuclear plant is built and in operation. Still, by paying the interest each year rather than after the plant is completed, the cost of a plant would be reduced by about 25 percent, said Robert Gruber, director of the Public Staff, this state's consumer advocacy agency. That's why Gruber has thrown his support behind the power companies' proposal, after years of opposing the idea as bad public policy. 'I've reluctantly come to this conclusion because nuclear plants are so expensive,' said Gruber, whose agency intervenes on behalf of ratepayers in utility rate cases."

Huh? Isn't it odd that Gruber, rather than questioning whether super-expensive nuke plants even make bottom-line financial sense in the first place as a competitive generator of electricity, is so willing to drink the electric industry Kool-Aid?

Here's the News & Observer story. Read it and weep.

-- Robert Trigaux, Times Business Columnist

[Last modified: Thursday, February 10, 2011 7:18am]

    

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