May 2, 2012 / 4:10 PM / 8 years ago

UPDATE 1-Progress says Florida Levy reactors delayed, cost up

* First reactor delayed to 2024 from 2021

* Cost estimate up to $19 billion-$24 billion

* NRC expected to issue license in 2013 to build Levy

By Scott DiSavino

May 2 (Reuters) - U.S. power company Progress Energy Inc’s Florida utility has delayed the in-service date for the first reactor at the proposed Levy County nuclear power plant on Florida’s west coast to 2024, with the second unit following 18 months later.

The company also boosted the cost estimate for the 2,200-megawatt Levy project to between $19 billion and $24 billion, it said in a statement.

Previously, the company said the first unit at Levy was expected to enter service in 2021 at an estimated cost of $17 billion to $22 billion.

Progress, based in North Carolina, said it pushed back the schedule and raised the cost estimate because of lower-than-expected customer demand, an economic slowdown, uncertainty over potential carbon regulation and low natural gas prices.

“Nuclear remains a key component of Progress’s balanced solution strategy to meet customers’ future energy needs,” Vincent Dolan, president and CEO of Progress Energy Florida, said in the statement.

The company included the schedule and cost changes in its annual nuclear cost-recovery projections with Florida’s utility regulator for the 2013 billing cycle.

In addition to the proposed new reactors, Progress wants to increase the output of the 860-megawatt Crystal River nuclear plant in Citrus County, near Levy.

Florida’s nuclear cost-recovery rules, which are similar to regulations in other U.S. Southeast states seeking more nuclear power, allow utilities to recover development, construction and interest costs for new nuclear projects.

Georgia and South Carolina are using similar cost-recovery rules to encourage units of Southern Co and Scana Corp and partners to build new reactors in their states.

Utilities say the rules make reactor construction possible and help reduce customer costs.

Florida wants more nuclear power in part because natural gas fuels about 60 percent of the state’s capacity, Progress said.

“Overdependence on any fuel can expose customers to fuel cost spikes and supply disruptions. (Florida’s utility regulator) has cited the growing lack of fuel diversity in the state as a major strategic concern,” Progress said.

Natural gas is cheap now, near a 10-year low of around $2.30 per million British thermal units, but over the past decade it has averaged above $6 and spiked to more than $15.


If Florida regulators approve of Progress’ request, the company said total nuclear cost-recovery charges would be $5.09 on a 1,000-kilowatt-hour (kWh) residential bill beginning with January 2013 billing, compared to $2.86 in 2012.

Progress said the 2013 breakdown would be $3.45 on a 1,000-kWh residential bill for Levy and $1.64 for Crystal River, up from $2.67 for Levy and 19 cents for Crystal River in 2012.

Progress said the Levy portion of the bill would be fixed at $3.45 through 2017.

Crystal River has been off line since September 2009, when a refueling and power up-rate began. During the upgrade, workers discovered a gap in the concrete containment dome, which was opened to install new steam generators.

Crystal River was originally expected to restart in April 2011 but Progress said last summer the unit would not restart until 2014. The company has estimated the cost of repairing the containment structure at between $900 million and $1.3 billion.

Last week, U.S. Nuclear Regulatory Commission (NRC) staff said in a final report that there were no environmental impacts that would preclude issuing construction and operating licenses for the proposed Levy reactors.

Progress expects the NRC will decide on the Levy licenses in early 2013.

Progress applied with the NRC in July 2008 to build and operate two Westinghouse Electric AP1000 reactors at Levy.

Westinghouse is majority-owned by Japanese multinational Toshiba Corp.

In January, Progress agreed to a $13.7 billion merger with neighboring North Carolina power company Duke Energy.

Duke is also seeking to build a nuclear plant at Lee in South Carolina and last summer signed a letter of intent to buy a potential stake in the Summer reactors being built by Scana and partners in South Carolina.

A spokeswoman at Duke, Rita Sipe, said the company could not speculate on whether a combined Duke-Progress would pursue both Lee and Levy since the companies had not completed the merger.

Sipe said Duke continued to develop the Lee site to ensure it remains an option in the future. She said Duke anticipates obtaining a license for Lee from the NRC in 2013.

Duke has not yet decided to pursue Lee, but it appears in the company’s integrated resource plan as an option for the future to enter service around 2020-21. Several years ago, Duke estimated the Lee plant, which like Levy includes two Westinghouse AP1000 reactors, would cost $11 billion.

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