* Levy to cost $17.2 billion to $22.5 billion
* First Levy unit to enter service in 2021
* Delay will postpone customer rate hikes
NEW YORK, May 6 (Reuters) - Progress Energy Inc (PGN.N) boosted the estimated cost of its proposed Levy nuclear power plant in Florida and delayed its start-up to 2021 due to a delay in licensing the reactors, a spokeswoman for the company said on Thursday.
The company estimates the project to build two 1,100 megawatts reactors at Levy about 130 miles (209 km) northwest of Orlando, would cost $17.2 billion to $22.5 billion -- up from its previous estimate of $17.2 billion.
The first reactor is now expected to enter service in 2021 with the second 18 months later. Progress originally estimated the first unit could enter service in 2016 but delayed that estimate by about 20 months a year ago.
"Slowing work on the Levy project until we receive the license is the right decision for our customers and our company," Vincent Dolan, president and chief executive officer of Progress Energy Florida, said in the release.
Progress now expects the U.S. Nuclear Regulatory Commission to issue the combined operating license (COL) for Levy in late 2012. Earlier, the company expected to get the license as soon as late 2011 but pushed that back after receiving numerous requests for additional information, the spokeswoman said.
The company said in a release last week it delayed work on Levy for several reasons including: the need to reduce capital spending to avoid short term rate increases; a recent credit rating downgrade of Progress Energy Florida; a delay in licensing the Levy reactors: the economic recession; and uncertainty about federal and state energy policies, including carbon regulation.
Progress, which serves more than 1.6 million customers in Florida, said in a filing last week that customers would see lower nuclear costs on their 2011 bills due to the company's decision to postpone major construction activities at Levy until after the federal licensing is complete.
For 2011, the company is seeking to recover $164 million in nuclear costs, which includes the Levy plant and investments to increase production at the Crystal River nuclear plant.
If the state Public Service Commission approves the company's 2011 nuclear cost estimates as filed, Progress estimated the average residential customer would pay $5.53 a month on a 1,000 kilowatt-hour bill ($4.99 for Levy, and 54 cents for the Crystal River uprate) beginning with January 2011 bills.
That is 21 percent lower than the $6.99 per month customers currently pay on a 1,000-kWh bill ($6.78 for Levy and 21 cents for the Crystal River uprate). (Reporting by Scott DiSavino; Editing by Marguerita Choy)