Utilities won’t get nuclear cost break this year
By John Murawski
May 04, 2011
Japan’s nuclear crisis has derailed an effort in this state to make it easier for Duke Energy and Progress Energy to raise rates to pay for new nuclear reactors.
That means it will be next year – at the earliest – before the state legislature would even consider the legal change sought by electric utilities, Duke Energy CEO Jim Rogers said during a conference call with Wall Street analysts on Tuesday.
Duke and Progress have said they need to be able to pass along nuclear costs to customers without extensive rate hearings. They want a streamlined regulatory proceeding focusing on nuclear expenses only – not one that requires an audit of all company operations.
Such streamlined cost recovery would take several weeks to process, as opposed to the several months that would be needed for full rate hearings.
The two politically influential power companies had lobbied to line up political support and, with business-friendly Republicans in control of the General Assembly, had a good chance of getting the legislation passed this year.
But then a giant tsunami in March crippled Japan’s nuclear reactors and no bill materialized in this state.
“The events in Japan have affected concerns of the appropriate timing of the legislation,” Rogers told analysts.
The nuclear legislation may also have given way to more pressing priorities. State government is contending with a massive shortfall and partisan budget battle.
Rep. Pricey Harrison, a Democrat from Guilford County who is on the House Public Utilities Committee, said the nuclear proposal looked like a sure thing but lost steam after the Japanese crisis.
Nuclear critics have said such a law would shift the risk of building nuclear plants from shareholders to customers, raising monthly bills years before the customers saw any benefit from the rate increases.
But the nuclear industry says the change would allow power companies to recover their financing costs early and make interest payments on an annual basis, shaving hundreds of millions of dollars from the total cost of a nuclear project and reducing the overall impact of the rate increases necessary to pay for new reactors.
Duke and Progress officials have said in the past that Wall Street won’t front the money for new nuclear construction without a streamlined law for quick cost recovery.
On Tuesday Rogers said without a new law, annual rate hearings would be the only alternative, albeit a time-consuming and costly option.