Monday, June 18, 2018
News Roundup

Progress Energy looking to cancel main construction contract for building Levy County nuclear plant

Progress Energy plans to cancel the main development and construction contract for its proposed nuclear plant in Levy County, but its customers will have to keep paying in advance anyway.

The move could add hundreds of millions of dollars to what customers are already paying, if Progress decides to restart the project. It also raises questions about the "pay as you go" advance fee set up by the state Legislature explicitly to speed up nuclear plant construction and save money.

"It's a dramatic strategy change (by Progress)," said Arnie Gundersen, a nuclear engineer who testifies before public utility commissions throughout the country. "Now, it looks like they're retreating."

Progress spokeswoman Suzanne Grant said the utility will continue to seek federal approval for the $20 billion project, and "we'll reassess the project once we receive the (operating) license.''

Grant acknowledged that cancelling the construction contract will keep the Levy nuclear plant from opening by its current projected start date of 2021.

Progress is seeking to terminate the Levy construction contract as part of a settlement agreement announced last week over its crippled Crystal River nuclear plant.

Grant would not discuss the reason Progress wants to cancel the contract or details about what items the utility purchased under the contract, citing confidentiality.

The contract enabled Progress to purchase in advance such items as nuclear parts produced by only two companies in the world. It can take years to acquire the parts because of demand from various utilities.

So far, Progress Energy has spent $1.1 billion on the development and planning of the Levy County nuclear project — $545 million coming from its customers through the end of 2011. Progress' 1.6 million customers in Florida will eventually pay the remaining $555 million, too.

The advance fee resulted from legislation passed by state lawmakers in 2006 to allow utilities to collect money from customers for future construction of nuclear power plants. It was considered a major shift in policy for building new power plants. Proponents said paying for the projects "as you go" would speed up construction and save money on the financing of the plants.

But the Levy plant has not met either of those goals.

In 2006, Progress said the project would cost $4 billion to $6 billion and open in 2016. The price jumped to $10 billion in 2007. In 2008, the utility said the project would include two reactors, instead of one, and cost $17 billion.

A year later, the price remained the same, but the start date moved to 2018. In 2010, the date moved to 2021, and last year price projections reached as high as $22 billion.

"They've made a mess of this whole process," said state Sen. Mike Fasano, R-New Port Richey, who wants to repeal the law that requires the advance nuclear construction fee. "I believe they knew a long time ago that they would never build these plants.

"It's time for Progress Energy to refund the money the ratepayers have paid for power plants that will never be built," Fasano said.

Whether Progress will ever build the Levy plant remains unclear, but if the state continues to allow the utility to collect money for the project, the so-called advance fee could go on for years.

The state Office of Public Counsel, which represents consumers before the Public Service Commission, has argued that Progress' own documents suggest the utility won't bring the plant online until at least 2027 — if at all.

Because of delays and the possibility the plant will never be built, the public counsel has argued — to no avail — that the advance fee should be suspended. To avoid extra costs to customers, the public counsel also had urged the PSC not to approve the construction contract until after Progress received its federal operating license, an argument the PSC also rejected.

Progress entered an agreement with a consortium of Westinghouse Shaw and Stone & Webster for the construction contract. Westinghouse is the maker of the reactor that Progress intends to use for the Levy County plant, called the AP1000.

Stopping the contract does have benefits, said J. R. Kelly, the state public counsel. It means Progress will not incur any more immediate costs related to purchasing and construction that could be passed on to customers.

And the settlement agreement, which Kelly helped negotiate, caps the amount Progress can collect from customers for Levy at $3.45 a month on the average utility bill from 2013 through 2017. Without the agreement, that fee could have reached $26.05 a month for the average customer by 2017.

Under nuclear fee law, none of the money Progress has spent on Levy has to be refunded, even if the utility doesn't build the plant.

Because of the way the law is crafted and with all of the money customers have spent to date, Kelly said he decided to support the settlement agreement as a way to save customers some money.

"If they end up not building the facility, ratepayers are still going to have to pay," Kelly said. "We want to stop any unnecessary spending as quickly as possible."

Ivan Penn can be reached at [email protected].com or (727) 892-2332. Follow him on Twitter at www.twitter.com/Consumers_Edge.

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