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Progress Energy's plan for oft-delayed Levy County nuclear plant under fire

Since 2009, Progress Energy customers have been paying for a nuclear plant that will not generate a kilowatt of power until 2016. Wait, make that 2018. Well, maybe 2021.

Now, more dismaying news. State consumer advocates say they have evidence the plant won't open until 2027. Indeed, they openly wonder if the plant will ever be built.

This week, the state Office of Public Counsel, which represents consumers in utility matters, will argue that, given the uncertainty over the plant's future, customers' advance payments should be cut in half.

In the regulatory equivalent of a trial, deputy public counsel Charles Rehwinkel will note that the state forced customers to pay in advance in order to bolster the economy, create jobs and, of course, get a plant built.

"None of that is happening,'' Rehwinkel said. "They've spent enough money.''

Central to his case: a confidential 2010 Progress Energy status report on the proposed plant in Levy County. Virtually all of the report is being kept secret from the public. Before giving a copy to state officials, the utility redacted almost everything of substance — leaving behind provocative details like the word "Levy'' in close proximity to the date 2027.

Progress will respond that Rehwinkel's arguments are baseless.

"The company's interest in the Levy project remains steady," said spokeswoman Suzanne Grant. "There has been no change to the estimated timeline of 2021."

The Public Service Commission will hear the evidence and act as judge and jury.

If the Public Counsel's Office prevails, Progress customers might soon get some relief from advance payments that for the average customer would reach $50 a month by 2020.

But they should not get their hopes up. The law that allows Progress to charge its customers for a nonexistent power plant is stacked against them.

• • •

In the spring of 2006, the Florida Legislature passed the law allowing advance charges. The idea was to meet the needs of a then-growing, power-hungry economy and speed up the process of getting a plant online. (Not all states have such a law; North Carolina, where Progress also operates, forbids advance charges for nuclear plants.)

Florida lawmakers deliberately increased the burden on those who would argue the advance charges were not warranted, saying the evidence must be "clear and convincing."

That December, Progress Energy announced plans to build a $4 billion nuclear plant on a 3,000-acre site in Levy County about 8 miles north of the utility's Crystal River nuclear and coal energy complex.

The target date to fire up the plant: 2016.

Within three years, the utility began charging customers for the project. The fee for the average Progress customer is now $4.99 a month but will rise dramatically over the next few years.

In 2009, the company announced a 20-month delay in the project after the Nuclear Regulatory Commission told Progress it could not begin building the foundation for the plant until the NRC approved its license, a hurdle the company did not expect.

Last year, the utility postponed the start date until 2021 because of delays in obtaining the federal license. The latest cost projection has soared to around $20 billion.

Rehwinkel and the staff at the Public Counsel's Office asked Progress for all its strategic planning documents relating to the Levy County plant. Among the documents the utility turned over was a "Scenario Analysis,'' 33 pages of charts, many of them showing a timeline from 2010 forward.

Progress had redacted every piece of substantive information.

One bar chart, for instance, is titled "Scenario: Moderate Change.'' It appears to project changes in power generation between 2010 and 2029. Every bar and all but two of 15 or so labels are blacked out.

One of the remaining labels is "Levy 1 & 2,'' a reference to the two planned reactors at the Levy site. Piquing Rehwinkel's interest is that the label appears over the blacked out bar for 2027.

The Public Counsel threatened legal action if Progress Energy did not turn over an unredacted version. But it had to proceed with its investigation without it.

• • •

The Public Counsel's case rests on the opinion of William Jacobs, a former nuclear plant site manager for Westinghouse. His 35 years of experience in electric power generation and doctoral degree in nuclear engineering have made him a go-to expert for power companies and public utility commissions around the country.

Jacobs makes six points to support his argument that Progress plans to delay construction of the Levy plant until 2027:

• Progress is diverting the attention of key Levy project managers to other activities. Among them: Jeff Lyash, former president and CEO of Progress Energy Florida, whom Jacobs describes as the Progress officer responsible for the Levy project.

• Progress' own analysis shows that trends in fuel costs are making nuclear power relatively less cost effective than other sources.

• The trend in natural gas prices and lack of progress toward legislation regulating greenhouse gases increase the utility's "enterprise risk.''

• Progress had hoped to find a partner to share ownership (and financial risk) of the project, but that has become less likely because of cost increases and regulatory delays.

• Public support for nuclear plants has diminished since the meltdown at Japan's Fukushima plant.

• Finally, Progress, having considered all those factors, seems to be planning for the possibility of delaying the plant opening until 2027.

Jacobs based that last conclusion on the redacted "Scenario Analysis'' Progress gave to the Public Counsel's Office.

In written testimony to the PSC, Jacobs wrote that Progress Energy's "actions continue to demonstrate doubt as to the likelihood of completion of the project on the current schedule — if at all." Jacobs uses "if at all" three times in his report referring to the possibility of the plant never getting built.

Progress turned over an un­redacted version of the "Scenario Analysis'' only after Jacobs completed his report. But the Public Counsel's office had to agree to keep it secret.

"It definitely did not change our opinion," Rehwinkel said. "I don't think I can say anything more than that because of the confidentiality agreement."

• • •

John Elnitsky, Progress Energy's vice president for new generation programs and projects, can sum up his reaction to Jacobs' report in just two words:

"Flat wrong."

"Jacobs attempts to use these scenario analyses documents as evidence of some sort of mysterious and clandestine plot to forgo the (Levy plant) in an effort to support his view that (Progress Energy) may not ultimately intend to go forward," Elnitsky wrote in his testimony to the PSC.

The discussion of various scenarios that so alarm Jacobs, Elnitsky wrote, are in fact routine exercises that take place as part of any large and expensive project.

Elnitsky says Progress remains focused on the 2021 date to fire up the first of the two reactors at Levy. He added that advanced payments by customers should not be reduced beyond what Progress Energy has already recommended because the project is in fact moving forward.

"Jacobs, nevertheless, recommends that the Commission deny (Progress) the recovery of certain reasonable costs . . . not because those costs are unreasonable in amount or because they are not necessary to the project," Elnitsky wrote, "but simply because Jacobs speculates that (Progress) may not intend to build the (Levy plant) in the future."

The utility has said that it continues to pursue joint owners for the Levy project, though no announcement is pending at this time. Progress has said a joint ownership agreement could lower customers' advance payments.

• • •

When the hearings conclude, the PSC will determine just how much Progress Energy customers will have to pay in 2012.

They'll have to pay something, since Progress Energy already has racked up about $1 billion in expenses related to the Levy nuclear project. Customers have paid just $471 million through the end of June.

Any final decision about whether Progress Energy will build the plant won't come until after the Nuclear Regulatory Commission completes its review of the utility's license application. The results of the review are expected in late 2012 or early 2013, which the company says is part of the reason for the slowdown in activity.

"After the NRC decision, the company will update its assessment of the project, cost and schedule to ensure that it remains in the best interests of customers, the state and shareholders," Grant said.

Meanwhile, Progress got good news from regulators last week. The Westinghouse AP1000 reactor that will be installed at the Levy plant cleared a crucial NRC safety review.

That finding was immediately challenged by a coalition of 26 public interest and environmental groups, who said the review was inadequate in light of the Fukushima disaster.

Ivan Penn can be reached at ipenn@sptimes.com or (727) 892-2332.

Rising costs of a reactor

Since Progress Energy announced plans to build a nuclear plant in Levy County, the utility has delayed the project twice and roughly quadrupled cost estimates.

2006

$4 billion to $6 billion,

start-up in 2016

2007

$10 billion,

start-up in 2016

2008

$17 billion,

start-up in 2016

2009

$17 billion,

start-up in 2018

2010

$17 billion,

start-up in 2021

2011

Up to $22 billion,

start-up in 2021

Progress Energy's plan for oft-delayed Levy County nuclear plant under fire 08/13/11 [Last modified: Saturday, August 13, 2011 11:38pm]

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