Duke Energy Florida, formerly known as Progress Energy, filed a motion with the Florida Public Service Commission Thursday to approve a settlement agreement that will cancel its proposed Levy County nuclear reactor project.
The project’s estimated cost to build two Toshiba-Westinghouse AP1000 reactors had skyrocketed by 400 percent, to $24 billion, from initial estimated costs of approximately $5 billion per reactor. The proposal also saw its original in-service dates delayed by at least eight years.
Cost overruns and delays belied promises made by Progress to the Legislature, and to customers, when the company said its nuclear reactors would bring cheaper energy. The company, along with Florida Power and Light (which has its own pending nuclear-power project) used such promises to convince the Legislature to enact a law that forces rate-payers to foot the bill of nuclear power construction years before the plants are actually built, or even planned.
That was the case with the Levy County reactors: customers have already paid up to $150 million in up-front costs. That money will remain in the pockets of Duke Power shareholders, because the law does not require the companies to refund ratepayers. That prompted Sen. Mike Fasano, a bitter critic of the nuclear industry’s arrangement with the Legislature, to say: “Shame on Duke Energy.” But the Legislature is more to blame for the law.
Worse: the News Service of Florida reports that an agreement that took effect this year will allow Duke to continue recovering some Levy-related money through 2017 — an amount that translates to $3.45 a month for a residential customer who uses 1,000 kilowatt hours of electricity. In addition, customers will be required to pay as much as $1.466 billion over 20 years to cover continuing costs at the shuttered plant, such as costs related to making sure the building is safe and stable. But Rehwinkel, Glenn and Jon Moyle, an attorney for the Florida Industrial Power Users Group, said the agreement will require Duke to write down $295 million in costs — which essentially shifts responsibility for that amount from customers to company shareholders.
The motion was filed in the annual nuclear cost recovery clause docket – which is set to begin Monday – that considers approval of costs related to proposed new nuclear generation and determines the reasonableness of projected costs.
According to Florida Public Service Commission staff testimony in this year’s docket, “As of December 31, 2012, DEF has spent approximately $962 million on the Levy project including AFUDC” (Allowance for Funds Used During Construction). Duke has not yet recovered this entire amount from the Commission.
Hearings on the 2013 docket for Duke and FPL, which is pursuing two new nuclear reactors at an existing Turkey Point plant near Miami, are scheduled to begin next week.
“We welcome Duke Energy’s announcement today that they are seeking approval to cancel the controversial Levy County nuclear reactor project,” Stephen A. Smith, executive director of Southern Alliance for Clean Energy, said in a statement. “Since the merger, Duke’s leadership has taken a fresh look at these unnecessary nuclear projects and has absolutely made the right decision for Florida consumers.
“While details are still being resolved, Florida consumers should rejoice in knowing that the fleecing associated with this nuclear project will end. The time has come to stop throwing good money after bad,” tjhe alliance said.
The alliance has long opposed the project and the nuclear tax recovery mechanisms that have been associated with it.
The Florida Public Service Commission, the alliance said, “has been negligent in its protection of Florida ratepayers and as these projects are cancelled, the Commission must stand strong in defense of consumers. But we also must ensure that the utilities do not continue to pursue high-risk, unnecessary projects as if there were no viable exit strategy.”