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Florida nuclear project will take longer, cost more

By Fred Hiers |Ocala.com | May 6, 2010

There is good news and bad for Progress Energy Florida customers.

The utility company is asking Florida regulators for permission to cut its customers’ nuclear recovery costs next year by 21 percent, reducing the average nuclear cost of $6.99 per month on customer monthly bills down to $5.53. The reduction is part of Progress Energy’s decision to postpone major construction on its proposed Levy County nuclear plant.

The bad news is that postponing the project will likely mean construction costs will only increase when the utility decides to build the facility.

Company spokeswoman Cherie Jacobs said the company predicts the project, once slated to be on line by 2016 and cost about $17 billion, will now be operational no sooner than 2021 at a cost ranging between $17.2 billion to $22.5 billion.

The utility has about 65,000 customers in Marion County and more than 1.6 million throughout Florida.

The company’s new plan is to postpone rate hikes for the project until after its federal licensing is complete, rather than continue with construction at the scale and timetable it has been following until now.

Jacobs said several factors were considered when deciding to slow the project, including the Florida’s Public Service Commission’s recent decision to deny the utility a $500 million base rate hike request, and the agency’s recommendation to avoid any increases during the recession.

Another factor, Jacobs said, was recent credit rating agencies’ moves to downgrade the financial outlook of the utility because of the PSC’s rate decision. Florida’s economic downturn also played a role.

Moody’s Investors Service, Standard & Poor’s and Fitch Ratings all downgraded the utility’s ratings following the PSC’s decision not to approve rate hikes. Previously, the PSC had routinely approved most of the utility’s requests for more money.

Jacobs also said the uncertainty of the federal government’s energy plans, including carbon regulation, also made the future of how to proceed with the proposed Levy County nuclear plant unclear.

Jacobs said as the utility comes closer to when it needs to start construction of the plant, it will then decide whether to go forward with the project or scratch it.

The process of collecting money from customers for the project is allowed through Florida’s nuclear recovery cost legislation. The rule allows utilities to collect money for nuclear plant construction in advance of facility completion. The rule doesn’t place the utility under any obligation to complete the nuclear plant – or return customer money if the project fails.

The company has spent $600 million toward the project through 2009, $200 million of which came from customers, Jacobs said… Full article

May 7, 2010 - Posted by | Nuclear Power

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