NC Utilities Commission questions viability of Lee construction project
Statement by NC WARN Executive Director Jim Warren:
Durham, NC – North Carolina regulators have severely cut Duke Energy’s authority to continue spending to plan two units at the Lee Nuclear Station. The NC Utility Commission’s ruling is based on questions about need for the plant and future cost escalation, along with uncertainties about passage of controversial state legislation in 2012 that would force customers to pay up front for the nuclear project while absorbing automatic annual rate hikes.
Friday’s order* by the NC Utility Commission reduces pre-construction spending to a level that threatens the project’s future according to March testimony by a company vice president.
Duke originally sought permission to spend $229 million by the end of 2013, which would bring the total planning expenses to $459 million. After the NC Utility Commission’s Public Staff and NC WARN challenged the request, Duke countered that it could settle for $120 spending during 2011. But the Commission said the $120 million is all it will approve for the next three years, the point when Duke says it will formally apply for state permission to construct two Westinghouse AP1000s.
During March hearings, Duke nuclear official Jamil testified that to limit spending to North Carolina’s allocable share of $120 million “may unduly hamper the Company’s efforts to preserve the nuclear option for its customers in the 2021 time frame,” as noted in the Commission order.
The Commission also wrote that, “While uncertainties are not new to the electric industry, very significant uncertainties have been added since the last proceeding” in 2008 on the Duke project. They listed doubts about future customer demand, the effects the Fukushima disaster will have on future construction costs of nuclear plants and the costs of spent fuel storage. They also cited questions about whether North Carolina will pass “super-CWIP” legislation. In March, Duke CEO Jim Rogers testified that he cannot build the Lee project without such legislation, essentially because nuclear projects are so financially risky.
“Of particular importance is the uncertainty as to the date in the future when Duke would need a nuclear unit to be on line,” the order reads. And it notes that Duke’s falling demand has already delayed plans – from 2008 to 2013 – to seek state permission to build the Lee project.
Based on Duke’s July rate hike request, it’s clear that Jim Rogers’ nuclear ambitions could easily double his customers’ power bills from their 2009 levels.
This order is a severe blow against Duke’s new nuclear future. The Commission seems to concur with critics that the company better be looking to join the clean energy revolution instead of pouring more millions and years of time pursuing new nuclear power plants.