It's time for Progress Energy to pull the plug on its quest to build a new nuclear plant. The cost has skyrocketed, the energy market has shifted and the expected demand for power from consumers has declined since the Levy County project was proposed six years ago. If Progress Energy refuses to accept conditions have changed and continues to pursue this expensive pipe dream, the cost should be borne by its shareholders and not the customers.
There was a reasonable argument for building another nuclear plant when Progress Energy announced the project in 2006, even at an estimated cost of $5 billion. The cost of natural gas was expected to soar, and state and federal governments were talking about new regulations to reduce carbon emissions. Florida's housing market was still booming, and the demand for electricity was projected to outpace the capacity to generate power. Progress Energy officials painted a rosy picture that included paying as you go to keep costs down, ordering some key pieces of equipment early, and looking for a partner to invest in the plant.
None of that came to pass. The estimated cost has risen to more than $22 billion, and natural gas prices have dropped as new exploration methods have advanced. The housing market collapsed, and the weak economy has significantly cut the expected demand for electricity. Progress Energy missed out on federal loan guarantees and tax credits, failed to secure a partner and now has a pending merger with Duke Energy. Add it all up, and the only prudent decision is to acknowledge the landscape has changed and drop the project.
If Progress Energy were an unregulated private company, it could stubbornly pursue the new nuclear plant as long as its shareholders agreed to pay for it. But electric utilities are effectively regulated monopolies, and they have a guaranteed return. Particularly galling is a 2006 state law that allows electric utilities to bill customers in advance for costs tied to planning new nuclear plants that may never be built. Progress Energy customers already are on the hook for more than $1.1 billion for bills tied to the Levy project, and the utility is entitled to keep an estimated $150 million of that as profit. It is fundamentally unfair to keep billing customers for a project that is no longer defensible and may never be built — and for the utility to profit from it in the meantime.
As Tampa Bay Times staff writer Jeff Harrington reported Sunday, even some key nuclear industry leaders are backing off their support for new plants. Yet Progress Energy officials are refusing to acknowledge the obvious and continuing to pursue the project. They won't say how many billions would be too much to pay as they continue to seek an operating license for the plant from the Nuclear Regulatory Commission. They correctly argue that it's important to diversify fuel sources. But that goal should not be pursued without regard to the cost to consumers.
Florida and the nation need a more coherent energy policy, and there will be a price to be paid for diversifying fuel sources, advancing clean energy and reducing carbon emissions. But what sounded plausible in 2006 appears unworkable in 2012. Progress Energy should drop plans for a new nuclear plant in Levy County unless it is willing to pass all of the costs to its shareholders and stop unfairly charging customers.