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New Nuclear Plant Would Boost Electric Bills For A Decade
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Published: March 12, 2008
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ST. PETERSBURG - Despite eye-opening upfront costs that could bulk up electric bills 3 percent to 4 percent a year for the next decade, Progress Energy's top Florida executive insisted Tuesday that a new nuclear plant is the most efficient and cost-effective way to meet West Central Florida's future energy needs.
If approved, it would add about $9 to the typical monthly power bill.
Jeff Lyash, president and chief executive of Progress Energy Florida, met with reporters the day his company's petition for a determination of need was filed with the state Public Service Commission in Tallahassee.
The paperwork disclosed that the overall cost of the two-unit plant proposed for Levy County would be $17 billion. That's triple the company's initial estimate of $5 billion to $7 billion. "This $17 billion price that we're putting out there now, this is a comprehensive price, this is not just the purchase of power equipment," Lyash said. "This is construction of an actual plant on property, with staff and buildings ... escalated over the life of the construction project to account for inflation and incorporating financing costs.
"At $17 billion, this remains a cost-effective generating resource."
Previously, power plant construction costs had been passed along to ratepayers when the plant began generating power. Under a new state law, utilities can begin recovering construction costs years before power is actually produced.
Progress Energy Florida, whose parent company, Progress Energy Inc., is based in North Carolina, serves 1.7 million customers in 35 counties, including St. Petersburg and Clearwater in Pinellas County. The company has proposed building two nuclear reactors on 3,100 acres it owns near its Crystal River nuclear plant, about 70 miles north of the Bay area. Public hearings on the proposal likely will be held in May.
Lyash said that given the volatility of the energy markets and Americans' growing discomfort with high-emission coal and natural gas plants, "we can continue to do what we've been doing ... or we can make an investment. We feel an obligation to do this for our customers."
He said that in the past three months, the cost of coal has surged 55 percent, oil has risen 16 percent and natural gas, 29 percent. Although the Levy County plant has significant upfront investment, ratepayers will save $1 billion a year in fuel savings when it is up and running and will avoid swings in the fossil fuel market, Lyash said. The first unit in Levy County would open in 2016, the second in 2017, according to Progress Energy's timetable.
Information from The Associated Press was used in this report. Reporter Jerome R. Stockfisch can be reached at jstockfisch@tampatrib.com or (813) 259-8402.
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Reader Comments
Posted by ( brood225 ) on March 12, 2008 at 4:54 p.m. ( Suggest removal )
Reducing our dependence on foreign oil and swings in the commodity market makes nuclear power the only option to stabilize American growth. Not to mention the benefits from reduced carbon and greenhouse gas emissions. Japan, Russia, France and even Iran operate nuclear power plants. Isn't it time for the United States to enter the 21st century?
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Posted by ( Rod_Adams ) on March 14, 2008 at 3:19 a.m. ( Suggest removal )
The concept of investing now to achieve a long term solution to both energy supplies and greenhouse gas emissions caused by competitive sources of energy is very sound.
As a former submarine engineer officer and a lifelong Florida resident - temporarily living outside of the state while I continue to serve in the Navy - I cheer the far sighted decision making that FP&L and Progress Energy have recently demonstrated by their plans to invest in nuclear power.
I am also proud of my home state for allowing customers to pay a little now to avoid making the initial plant investments even more expensive than they are under the current plan. One of the main reasons that the First Nuclear Age stopped was that plant owners had to borrow money for 10-15 years during the plant construction phase before they could begin paying off the loans. As anyone who was active in the market in the late 1970s - mid 1980s remembers, interest rates back then were in the double digits. Some of the plants completed in the late 1980s had huge cost overruns, but fully 2/3 of the final cost of the plant was due to interest during construction.
Florida's plan avoids that source of cost overruns. Now let's hope that the constructors, engineers and managers do their jobs well the first time an that they do not run into too much absurd opposition. Rework and unnecessary delays were also major sources of the cost overruns experienced that first time around the nuclear option. These days, we cannot consider it an "option" so we must do the job right the first time.
Rod Adams
Editor, Atomic Insights
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