Florida grants early recovery of nuclear costs

HOUSTON, Oct 14 (Reuters) - Florida regulators on Tuesday approved plans to allow the state's two largest utilities to collect more than $600 million next year in costs for new nuclear plants expected to be online in eight to 10 years.

"We are encouraging utility investment in nuclear electric generation today to ensure Florida's residents have reliable power for tomorrow," said Matthew M. Carter II, chairman of the Florida Public Service Commission.

Beginning in January, FPL Group's (FPL.N) Florida Power & Light unit will collect $220.5 million toward costs to expand output at four existing FPL nuclear reactors and to build two new reactors in South Florida, the PSC said.

An FPL customer using 1,000 kilowatt-hours of electricity each month will pay about $2.13 a month, said FPL, the largest utility in the state with 4.5 million customers.

Progress Energy Florida (PGN.N), the second largest with 1.7 million customers, will begin collecting more than $418 million toward projects to increase output at its existing Crystal River reactor and to develop two new reactors in Levy County.

Progress customers will see monthly bills rise by $12.14, the company said. Early costs to be recovered are tied to site selection, deposits for large equipment, costs to file for a construction and operating license with the U.S. Nuclear Regulatory Commission as well as interest, Progress said.

The Florida Legislature in 2006 directed regulators to address nuclear construction costs annually, "to spread the rate impact to customers over time and to reduce financial and regulatory risk that would otherwise prevent nuclear projects," PSC Chairman Carter said in a statement.

The utilities' current plans would add nearly 5,000 megawatts of nuclear capacity to the state.

FPL's nuclear expansion program includes two reactors at its Turkey Point facility in South Florida. Depending on the nuclear design FPL chooses, the cost could range from $12 billion to more than $24 billion with additional transmission, the company has said. The units could enter service in the 2018-2020 time frame.

FPL also plans to spend $1.5 billion to add 400 MW of capacity at existing reactors at St. Lucie and Turkey Point by 2012.

Meanwhile, Progress Energy Florida has said its plan to build two of Toshiba Corp's (6502.T) Westinghouse 1,100-MW AP1000 reactors in Levy County will cost at least $17 billion.

The utility said it continues to look for a partner to share ownership of the new facility. Progress is also working to add 180 MW at its 838-MW Crystal River plant at a cost of $439 million by 2011.

Once the reactors begin producing power, the utilities said their fuel costs should fall.

"Nuclear power represents the most cost effective and environmentally responsible way to serve Florida's growing need" for power, Progress said in a statement. "Energy demand is expected to grow 25 percent in Progress Energy Florida's 35-county service area over the next decade."

Another Progress utility is pursuing development of two new reactors in North Carolina. (Reporting by Eileen O'Grady, editing by Richard Chang)