Will credit crunch, economy hurt nuke plans?
Wake up and good morning. It could be a ripple affecting the largest private sector investment ever made in the greater Tampa Bay area. Is the recession, the financial credit crunch and the federal bailout endangering the viability of the Levy County nuclear power plant proposed by Progress Energy Florida, as well as other utility-planned nukes? These are monumentally expensive, long-term deals with layers of regulation and review. An economic slip, a political shift or a loss of focus (or nerve) by the power company behind such deals can delay or conceivably halt such mega-projects.
We're not at that point by any means, though we do not know the depth of this recession either. But the question of nuclear power's future -- more when, not if -- is raised in today's Wall Street Journal story headlined "Clean Energy Confronts Messy Reality" in which a number of power companies express doubts about the financial climate for taking on new projects, from alternative energy to nuclear.
Progress Energy Inc. has filed an application with the Nuclear Regulatory Commission to build two new reactors (on one Levy site) in Florida at a cost of about $17-billion. (Here's a map showing the sites of all newly proposed nuclear power plants.) But the company, which has utilities in the Carolinas and Florida, is worried it might lack the heft to swing the financing, the story says, It quotes CEO Bill Johnson at Progress Energy's corporate headquarters in Raleigh, N.C.: "I don't want to find out." Johnson wants to find partners to share the risk and expense and hopes bank financing will thaw by the time financing is needed. One potential investor could be Tampa's TECO Energy, the parent of Tampa Electric, which lacks the geography and expertise to do its own nuke plant but would love to diversify its energy holdings as an industry investor.
So far, most of the U.S. nuclear energy industry seems undisturbed by the slowing economy, though my gut says otherwise. NRC spokesman Roger Hannah in Atlanta told a newspaper this week that all of the 17 companies that have applied for licenses to build new plants are moving ahead with their plans. Said Hannah:
“These are long-term projects. A year or two of change in the economy may not have any dramatic long-term effect.”
On the other hand, financing multi-billion-dollar reactors is not a primary focus of the NRC’s mission. “That’s something we look at only in general terms,” Hannah admitted.
Of course, much of the financing for new nuclear power plants will come from higher rates paid in advance by electric utility customers -- people dealing every day with impact of rising living expenses. Progress Energy bills will increase 25 percent after the holidays to pay for both the rising cost of fuel and the early stages of its $17-billion nuclear plant. South Florida's power company, Florida Power & Light, also plans rate hikes in 2009 to reflect the up-front costs of its proposed nuclear power plant expansion.
-- Robert Trigaux, Times Business Columnist