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Progress Energy seeks rate hike despite nuclear plant delay

ST. PETERSBURG — Progress Energy announced Friday a 20-month delay in building its $17 billion nuclear plant, but its customers will continue to pay for it.

The utility wants to raise its customers' monthly bills for the Levy County project even though it won't start producing power until March 2018 at the earliest. If approved, the average residential customer using 1,200 kilowatt hours a month will see the nuclear charge rise to approximately $8 a month starting in January from about $5 today.

The Nuclear Regulatory Commission told Progress Energy that it could not begin building the foundation for the power plant until after it received its license, which is expected some time in late 2011 or early 2012. The utility had hoped to do some of the work before its license was approved.

The delay also may increase the $17 billion price, but the utility won't know the details until later this year, said Jeff Lyash, president and chief executive of Progress Energy Florida. He defended the utility's decision to continue to charge customers for the plant. The investment will save customers money in the long run, he said. Without it, the project will likely fail.

"Nuclear is critically important in helping us hit the right balance with fuel diversity, security, greenhouse gas reductions, and it's in the best interest of our customers," Lyash said.

The utility has faced populist outrage this year against its rising rates. In January, its customers saw a monthly increase of $12.11 per 1,000 kilowatt hours to pay for nuclear projects, part of an overall 24 percent increase.

Customers rebelled, flooding their legislators with angry phone calls. Some lawmakers threatened to reverse the 2006 law that allowed utilities to bill customers as they go for the early costs of building a nuclear power plant, years before the plant starts producing electricity. With other power plants, utilities have to wait until they are producing power before they can charge customers for them.

Progress Energy responded to the backlash by taking a step backward. The utility lowered its rates, reducing the monthly nuclear charge to $4.31 per 1,000 kilowatt hours. Now, the utility wants to raise that charge to $6.69 per 1,000 kilowatt hours. A small portion of the charge pays for upgrades at the existing Crystal River reactor, but most of the money pays for the Levy County project. On top of the nuclear charges, the utility also wants to raise its base rates starting as early as this summer.

Sen. Mike Fasano, R-New Port Richey, said Friday, "It really amazes me how shameless Progress Energy is. They have no consideration for the customer. None whatsoever."

Fasano voted in favor of the nuclear legislation in 2006 but said he feels differently about it today. He said he wants to see the early charges for the plant suspended.

"A few years ago, the cost was going to be half of what it is now. With further delays, the cost will increase," Fasano said.

Delays and cost overruns derailed the nuclear industry in the 1970s and 1980s, leading to a 30-year break in new plant construction. This time, the industry worked with federal regulators to streamline the years-long licensing review process. Instead of power plants that differed from project to project, this time energy companies would pick from a handful of standardized designs. Instead of two licenses from the Nuclear Regulatory Commission — the first to build, the second to operate — the utility would get one combined license. The industry promised the changes would speed projects along, and forestall the multibillion dollar boondoggles of decades past.

However, there are early signs that all is not going smoothly. This week, the commission said its review of the Westinghouse AP1000 — the reactor design picked by Progress Energy, Florida Power & Light and four other energy companies — is running 15 months behind schedule. The agency estimates that it will review and approve the design by August 2011. Without approval of the design, Progress Energy and the other energy companies cannot get their licenses to start construction.

Lyash said work on the Levy County project continues. The utility will continue to spend money on licensing, permitting and the transmission lines needed for the power plant. The utility can also continue to order long lead-time components, and build a barge slip and heavy haul road to bring equipment to the site.

So far, Progress Energy said it has invested $389 million in the Levy County project, and that approximately $80.5 million has been collected from customers.

Asjylyn Loder can be reached at aloder@sptimes.com or (813) 225-3117.

Progress Energy seeks rate hike despite nuclear plant delay 05/01/09 [Last modified: Friday, May 1, 2009 10:42pm]
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