nuclear-news

Florida’s sorry story of ratepayers stung by upfront nuclear construction costs

Nuclear power project financing option sticks ratepayers with tab, Indy Star By John Russell, john.russell@indystar.com February 1, 2014  “……..the Florida legislature passed a CWIP bill, allowing utilities to charge ratepayers up front for construction costs of nuclear power plants. Supporters said it was a way to get nuclear plants built faster and cheaper. Opponents called the bill “crony capitalism,” saying it would shift the risk of start-up costs onto ratepayers in the form of higher utility bills, while utility investors would reap the profits.

Two years later, the new Florida law got a taker. Progress Energy filed an application to build a nuclear plant in central Florida, estimating it would cost $5 billion. But over the next few years, the price tag climbed to more than $20 billion, due to delays and larger-than-expected costs.Then things got complicated. In 2010, Florida utility regulators rejected Progress’s request for $368 million in rate increases around the state. In response, Progress said it would stop spending on nuclear power plants, delaying the new plant. In response, lawmakers revised the law that guaranteed Progress could shift all construction costs onto ratepayers.

In 2012, Progress was bought by Duke Energy. A year later, Duke said it was shelving the new Florida nuclear plant, citing delays and “regulatory uncertainties.”

But Florida ratepayers are still on the hook. Over the years, Progress and Duke have collected about $1.5 billion from ratepayers — and do not have to pay it back.

“Thank, you, Tallahassee, for making us pay so much for nothing,” read a headline in the Tampa Bay Times last summer, in a sentiment aimed at state lawmakers.

Critics says CWIP is hard to stop once it gets started, regardless of the cost.

“Once you pass these things, and once these guys start spending billions of dollars, they become freight trains you just can’t stop,” said Mark Cooper, a longtime critic of nuclear power and senior fellow at the University of Vermont.

Florida isn’t alone. Around the county, other major nuclear or coal plants are being built under CWIP laws.

In Georgia, a project to build two additional reactors at Southern Co.’s Plant Vogtle was originally estimated to cost $14 billion. It is now almost two years behind schedule and nearly $1 billion over budget……….

Analyzing the track record

Some critics point to the track record and say CWIP is an open checkbook for big energy companies who can’t get funding for expensive new plants from banks or Wall Street.

“It’s simply an ATM card for utilities,” said Grant Smith, a longtime utility-consumer advocate and senior energy policy adviser at the Civil Society Institute. “It is a power plant tax.”……

“The test that nuclear can’t pass isn’t how big it is, but whether energy can be generated at much lower cost in other ways,” said Peter Bradford, a former member of the U.S. Nuclear Regulatory Commission and former chair of the New York and Maine utility regulatory commissions. “The answer is clearly yes.”

A looming issue is how much a new nuclear project will cost — even at the small modular reactors, which are still years away from going from the drawing board to production. It’s difficult to give a price for one, since a utility has yet to buy or build one…….http://www.indystar.com/story/news/2014/02/01/nuclear-power-project-financing-option-sticks-ratepayers-with-tab-/5092887/

February 3, 2014 - Posted by Christina Macpherson | Uncategorized