Tuesday, February 20, 2018
Business

Progress Energy's proposed nuclear plant called 'poster child' for failure

Authors of a new report on the future of U.S. electricity generation highlight Progress Energy's Levy County nuclear plant as "the poster child" of failing, expensive power projects.

In a conference call Thursday to discuss the 60-page report, the authors called the Levy facility's $22 billion price tag "unprecedented" for a nuclear plant, and the $1 billion Progress customers are paying for a plant that might never get built a "sad experience" in power plant financing.

"It is, again, the poster child for what can happen if you don't do it right on the front end," said Ron Binz, co-author of Practicing Risk-Aware Electricity Regulation: What Every State Regulator Needs to Know and a former chairman of the Colorado Public Utilities Commission.

Denise Furey, another author of the report, said utilities and state utility commissions would better serve their communities by increasing power at existing nuclear plants than trying to build an expensive project like Levy.

"There's other ways to do it," Furey said. "Uprates are so much cheaper than new construction."

Progress Energy Florida started a project to increase the generating capacity of its existing nuclear plant in Crystal River, but customers have not been able to benefit because the utility cracked the 42-inch-thick concrete containment building during a replacement of old steam generators in 2009. The plant has been out of service since, and it remains unclear when it will come back into service, if at all.

The troubles at the Crystal River nuclear plant and with the effort to build the Levy project have been the subject of a series of reports in the Tampa Bay Times.

Despite the financial hurdles for the Levy project, Progress Energy maintains that it is "the best overall base load generation option for our Florida customers, taking into account total cost, potential carbon regulation, the benefits of fuel diversification and unknowns about fossil fuel prices," Progress spokesman Tim Leljedal said in a statement.

"We're working to get a license from the Nuclear Regulatory Commission to ensure this option remains open for the future," Leljedal said. "As we do with all major resource plans, we will continue to evaluate the project and its potential schedule in light of changes in customer demand, the general economy, energy policy and numerous other factors."

Thursday's report, produced by Ceres, an organization that favors use of energy efficiency and renewable power generation, analyzes the risks states and utilities face as they look to replace the nation's aging power plants.

The report urges states to diversify their energy generation sources and avoid relying on natural gas, even though prices recently hit lows of less than $2 from a high above $10 in 2008.

Authors of the report said during the conference call Thursday that the nation should analyze technology, cost and efficiency when moving to develop new electricity sources.

Ceres projects that utilities soon will spend as much as $100 billion a year — double what they currently do — for the next two decades.

New power plant projects include two new reactors at Georgia Power's Vogtle complex, two reactors at Scana Corp.'s V.C. Summer plant, and the proposed two reactors for Progress Levy.

The Georgia Power and Scana projects have been approved, but the Levy project has stalled because of licensing and escalating costs.

"It is unclear whether Levy will ever be built," the report states. "If the plant is canceled, Progress customers will have paid more than $1 billion in rates for no electricity generation. … Such an outcome could help to deteriorate the political and regulatory climate in which Progress operates, which could ultimately impact credit ratings and shareholder value."

Ivan Penn can be reached at [email protected] or (727) 892-2332.

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