NEI Nuclear Notes

We've been watching the wires pretty closely every since we caught wind of a potential announcement by Duke Energy about the proposed nuclear project in Levy County, Florida. So far, several outlets have incorrectly reported that the project has been permanently shelved. It's too bad those reporters didn't bother reading the fine print of the Duke Energy press release concerning a wide-ranging settlement with the Florida Public Service Commission (PSC) that went out about an hour ago (Bold emphasis mine): In 2008, Duke Energy Florida announced plans to construct two 1,100-megawatt nuclear units in Levy County, Fla. Duke Energy’s EPC agreement was based on the ability to obtain the Nuclear Regulatory Commission’s (NRC) combined construction and operating license (COL) by Jan. 1, 2014. As a result of delays by the NRC in issuing COLs for new nuclear plants, as well as increased uncertainty in cost recovery caused by recent legislative changes in Florida, Duke Energy wi...

NEI VP Richard Myers About a week ago, the Tampa Bay Times published an analysis by Ivan Penn claiming that ratepayers in Florida would be better served if Duke Energy built a natural gas plant in place of a proposed nuclear energy facility in Levy County . Over the weekend, that same paper published a letter to the editor by NEI's Richard Myers taking issue with that conclusion: Nuclear plants offer benefits The May 12 article "Levy nuclear plant more costly than a natural gas facility" fails to account for the economic and environmental benefits the two nuclear plants would bring to Florida. Progress Energy Florida, now Duke Energy Florida, determined in 2008 that the Levy nuclear plants would benefit the state by providing fuel diversity and price stability for consumers while avoiding air emissions. In 2012, Florida generated 68 percent of its electricity from natural gas, a significant increase from 47 percent in 2008. Floridians may recall that in 2008...

Uprate at St. Lucie impossible without CWIP. Two nuclear critics, Peter Bradford and Mark Cooper, recently published a report (pdf) explaining how “advanced cost recovery” for nuclear plants in Florida and South Carolina “creates another nuclear fiasco.” Cooper’s main argument seems to be that Construction Work in Progress (CWIP) shifts to ratepayers all of the risks of building nuclear plants. This is either a deliberate distortion or a misunderstanding of how the cost recovery mechanism works. How “advanced cost recovery” (aka CWIP) works When a utility builds any type of project, it uses a mix of debt and equity to pay for the construction. The debt comes from banks and other investors and, of course, the utility must pay interest to use the debt. The equity comes from the utility’s shareholders and also requires a return for its use. The CWIP financing mechanism, which is also allowed by the federal government for interstate transmission projects, allows a company building...

Bottom of containment vessel for new reactor at Plant Vogtle The following guest post was written by NEI's Mitch Singer. Jeff McMahon bases his argument against nuclear cost recovery “Editors Rebel Against Ratepayer Financing For Nuclear Plants,” on the sole premise that because natural gas is inexpensive at this point in time it will remain so for decades. Therefore, energy companies should rely solely on one source of electricity generation. Ignoring the old adage of not putting your eggs in one basket is as relevant in generation choices as it is in financial investments. Energy companies evaluate a variety of factors to determine their generating mix and plan not in years, but rather decades ahead. Public utility commissioners do the same. They conduct an extensive analysis of the state’s demand growth commonly known as a “determination of needs” that looks at all methods of generation to see which ones are most suitable. Commissioners are also obligated to make ...