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Duke Energy executive: Levy County nuclear plant will be built

Published Sep. 11, 2012

Duke Energy executive Jeff Lyash told state regulators Monday that the $24 billion Levy County nuclear plant will get built and come online in 2024.

"We've made a decision to build Levy," said Lyash, executive vice president for power generation. "I'm confident in the schedule and numbers."

A decision to move forward with the Levy project could cause electric bills to soar, beginning with an additional $20 a month for the average customer in 2018.

Lyash's firm stance on building the nuclear plant appeared to contrast with what his boss, Duke Energy CEO Jim Rogers, told the Public Service Commission at his first appearance before the regulatory body last month.

Rogers told the commission that the utility would secure its federal operating license and then determine whether to proceed with the project. The utility told the commission Monday that it would not likely receive the operating license until "late 2014."

Lyash's comments came during the annual review Monday of the nuclear project spending of Progress Energy Florida, which became part of Duke Energy in July. The PSC can use the evidence gathered at the hearing to help make future decisions about what customers pay toward the nuclear projects.

Lyash's adamant position about Levy surprised advocates for consumers, who questioned whether Lyash heard or read Rogers' comments from last month.

Lyash said, "no."

"I simply want to know if the company has made the decision to build Levy, and the answer is, 'Yes?' " asked James Whitlock, a lawyer for the Southern Alliance for Clean Energy, an environmental group.

"That is correct," Lyash responded. He added that the company regularly reviews feasibility of any project, but Levy's plans continue to move forward.

To bring the plant online by 2024, the utility would need to begin construction in 2016, Lyash said.

Late Monday, Progress Energy Florida spokeswoman Suzanne Grant said Lyash did not contradict Rogers' comments from last month.

"Our story has not changed," Grant said. "Our present intent is to proceed with the project."

So far, the company has spent $1.1 billion, which customers will pay even if the plant never gets built.

A settlement agreement approved by the commission earlier this year outlined most of the Levy-related expenses that customers must pay for the next five years. The utility, according to the agreement, can collect $3.45 a month for the average customer beginning Jan. 1, 2013 through the end of 2017.

But Southern Alliance for Clean Energy refused to sign onto the agreement and challenged the costs Progress Energy Florida continues to pass onto its customers for Levy and the damaged nuclear plant in Crystal River.

On Monday, SACE argued that Progress Energy Florida is collecting money from its customers for projects that no longer make economic sense.

Whitlock, SACE's lawyer, noted that projected figures showed that the $3.45 the average customer will pay a month under the settlement agreement would become $23.47 in 2018.

"Doesn't it seem like you're giving your customers a false sense of security?" Whitlock asked Progress officials.

Whitlock said SACE does not believe Progress will ever build the Levy plant.

"More delays are possible and properly characterized as likely," Whitlock said of Progress' nuclear efforts. "More cost increases are likely to come."

Lyash and John Elnitsky, a Progress vice president of project management and construction, said a new nuclear plant is not needed right now. But in the long-term, they said, the power will become important as Florida's economy recovers and currently low natural gas prices rise.

"Does the plant still make sense?" Elnitsky said. "Yes."

When Progress proposed the Levy project in 2006, the utility estimated it would cost $4 billion to $6 billion and come online in 2016. In 2008, the price reached $17 billion.

By 2010, the price stood at $17 billion but the startup moved to 2021. The price rose to $22 billion a year later.

This year, Progress announced the project would cost $24 billion and come online in 2024.

With all of the delays, commissioner Eduardo Balbis wondered whether the project had been put off so many times that "it is no longer cost effective."

Because of the volatility of natural gas prices and the ability of nuclear to produce large volumes of electricity inexpensively in the long-run, Elnitsky and Lyash said it was worth pursuing.

"Over the life of the project," Elnitsky said, "… it's still to the benefit of the customers."

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

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