Duke Energy strikes deal to lower customer bills, boost solar

TALLAHASSEE — Duke Energy Florida customers will finally stop paying for a nuclear power plant that's not being built.

Under a proposed settlement filed with regulators Tuesday, Duke's 1.8 million customers will not have to pay off the remaining $150 million for the Levy County nuclear project. That could trim $2.50 off the average monthly bill.

But there will be no reimbursement for the roughly $800 million that ratepayers have already paid toward the project that was abandoned four years ago — before it even got off the ground.

Related Coverage: Trigaux: Who is Duke Energy Florida and what have they done with that arrogant utility?

Harry Sideris, president of Duke Energy Florida, defended the already-paid 800 million as previously justified expenses and dismissed concern of the $150 million, which will be on Duke's books as a write-off shouldered by the public company's shareholders.

"We feel like the cost of Levy being written off is a small price to pay for moving forward," Sideris said in an interview with the Tampa Bay Times.

"All of the Levy nuclear costs are gone for good," said Charles Rehwinkel, an attorney with the Office of Public Counsel in Tallahassee who advocates for consumers. "Customers won't see another penny of those costs."

The far-reaching settlement with environmental and consumer groups — which will still need to be approved by the Florida Public Service Commission — also marks a major policy shift for Duke. The North Carolina-based utility is effectively giving up its long-held belief that nuclear power is a key component to its Florida future and, instead, making a dramatic shift toward more solar power.

Duke plans to add 700 megawatts of solar power over the next four years as part of Tuesday's announcement. Customers will not be charged for the power until 2019.

"Our company is really focused on a cleaner, smarter energy future, and gas and renewables are the path to that," Sideris said.

Included in the settlement are Duke, the Office of Public Counsel, Florida Industrial Power Users Group, Florida Retail Federation, White Springs Agricultural Chemicals Inc. and the Southern Alliance for Clean Energy.

The parties began working in January toward a pact that effectively ends all litigation over the aborted nuclear power plant.

What the settlement means for Duke customers is that their bills may be going up a bit less than the utility forecast just last week.

Under the new filing, the rate hike would be $123.90 per 1,000 kilowatt hours, a 4.6 percent increase from the current rate. This would supersede the 8.5 percent increase Duke filed for last week, which would raise customer bills to $128.54 per 1,000 kilowatt hours.

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Even with the lower increase, Duke remains the highest-priced major utility serving the greater Tampa Bay area.

The issue over customers being charged in advance for a nuclear power project has long been controversial. Duke's predecessor company, Progress Energy, said the Levy County nuclear facility was intended to reduce energy costs for decades, so long as customers paid up front to help the project come to fruition faster.

But the power plant was never built, despite consumers being charged for almost $1 billion in up-front costs. In 2013, the project was formally scrapped.

Previous Coverage: Rate hikes ahead: Duke Energy seeks 8.5 percent, Tampa Electric a more modest 1 percent bump

Spreading the costs

Under the new filing, customers also won't have to pay for underestimated fuel costs all at once as was stipulated earlier this year. Instead, fuel cost recovery for $196 million will be spread over the next two years.

Customers are still on the hook to pay an average of $1.52 each month for a power-increasing project at the now-defunct Crystal River nuclear power plant. Progress Energy, Duke's predecessor, botched a repair on the facility, leading to its premature shutdown. The power-increasing or "uprate" project was put into place before the plant was shuttered. Customers will continue to pay for the project through 2019.

No more nuclear — for now

Sideris elaborated on several ways Duke is moving away from nuclear power. The utility will allow the Levy nuclear license to expire, he said. The land where the project would have been is being "evaluated (for) options," according to Duke spokesperson Ana Gibbs. "(Duke) will make decisions based on the best interests of our customers and community," she said in an email.

Instead, Duke will continue with a heavy reliance on natural gas, a diminished use of coal and a greater push toward solar.

When asked if that meant no nuclear in the future, Sideris said Duke was still leaving the door open for the power source if it became more cost effective or other factors changed in the future.

The first 75 megawatts of Duke's 700 megawatts of solar power will be in Hamilton County in North Florida. It will come online by early 2019.

When the full 700 megawatts are completed, Duke will have about 720 megawatts in Florida, totalling about 8 percent of Duke's generation capacity.

Beyond increasing solar generation, Duke also is investing in 50 megawatts of battery storage to research how to store solar energy.

PRIOR COVERAGE: Nuclear vs. natural gas. Which is cheaper?

PRIOR COVERAGE: Duke Energy cancels proposed Levy County nuclear plant.

The PSC is expected to decide on the proposed settlement by December.

Contact Malena Carollo at mcarollo@tampabay.com or (727) 892-2249. Follow @malenacarollo on Twitter.