By Frank Vinluan
RALEIGH – North Carolina’s two largest electric utilities have yet to commit to building additional nuclear generation for the state, but they’re racking up hundreds of millions of dollars in costs just to keep the option alive.
And customers ultimately will pick up the tab for the costs, whether new nuke plants are built or not.
Charlotte-based Duke Energy, which is planning to build new nuclear reactors at its Lee Nuclear Station in South Carolina, has spent $188 million to date for items such as site evaluation, preparation of its application to the Nuclear Regulatory Commission and fees to the regulatory body.
Progress Energy of Raleigh has not publicly disclosed its costs to date for plans at its Shearon Harris plant.
Duke files its costs with the N.C. Utilities Commission every six months because it asked regulators if it could do so, says James McLawhorn, director of the Public Staff, the consumer arm of the commission. The filing does not mean Duke is planning to pass on costs to ratepayers immediately. Right now, that recovery can come only through the lengthy process of a rate case. But McLawhorn says the filing does give regulators a snapshot of Duke’s nuclear planning expenses to date.
Progress spokesman Mike Hughes says the utility has not disclosed its costs because it has not yet sought regulatory approval for the expenses in North Carolina.
But insight into those costs can come from looking at other states. South Carolina Electric & Gas this week received approval to raise rates by 2.3 percent to help recover its nuclear planning expenses of $47.3 million so far. The increase, roughly $3 for a home using 1,000 kilowatts of power a month, will show up on bills after Oct. 30.
Florida ratepayers soon will begin paying for Progress’ plans for new nuclear energy generation in the Sunshine State. To date, Progress has spent $397 million for its plans to build two additional nuclear reactors at its Levy County site, and the company has asked regulators for approval to pass those costs on to its Florida customers.
Unlike North Carolina, both South Carolina and Florida allow utilities early recovery of their nuclear planning expenses. If approved, a utility’s customers pay the expenses through an additional charge on their bills.
Consulting firm Synapse Energy Economics has estimated that the cost to build a 1,100-megawatt nuclear plant in 2008 would have been between $6 billion and $9 billion. But costs since have risen considerably. The cost projection for Georgia Power’s proposed two new nuclear reactors at its Vogtle site is now $14.5 billion.
Jim Warren, executive director of utilities watchdog group NC WARN, says new nuclear energy is becoming less likely in light of the rising costs. He believes Progress will back away from plans for new reactors at Shearon Harris altogether. Warren points to Progress’ annual filing of its energy plans, which outlines scenarios for its long-range energy supply. One scenario projects low nuclear construction costs, which Warren says are unlikely. The second excludes nuclear power altogether. The third proposes new nuclear generation in which Progress owns a 25 percent share of a plant.
Utilities do routinely share ownership in power plants. Progress owns 83.83 percent of Shearon Harris. The rest is owned by the N.C. Eastern Municipal Power Agency. The agency also has minority stakes in Progress’ Brunswick nuclear plant and its Mayo and Roxboro coal plants. Warren says that considering the rising costs projections, he doesn’t see anyone stepping up to take a majority stake in a new nuclear plant.
Progress Energy’s Hughes says the utility is committed to keeping the option for new nuclear open. “We can’t wait until the lights go out to figure out we need a new plant,” he says.
