Company lowers 2010 nuclear cost-recovery projections
ST. PETERSBURG, Fla. (May 1, 2009) -- Progress Energy Florida today announced plans to shift the construction schedule for its planned Levy County nuclear project. In addition, the company filed its 2010 nuclear cost-recovery estimates with the Florida Public Service Commission (PSC), as required. The company's proposal will decrease customer nuclear costs to about half of the amount the company is eligible to recover in 2010 under current law.
The company is adjusting the Levy County nuclear project schedule to reflect the Nuclear Regulatory Commission's (NRC) determination that the excavation and foundation preparation work -- originally scheduled to be completed at the same time the company was seeking a combined operating license (COL) for the plant -- will not be authorized until the NRC issues the COL. The company's shift in schedule will move the commercial operation dates for the two Levy units from the 2016-2018 time period by a minimum of 20 months. The COL grants a utility permission to build and operate a new nuclear power plant. The company expects to receive the COL in late 2011 or early 2012.
In today's nuclear cost-recovery filing, the company is seeking approval to spread certain costs over five years, lessening the yearly impact on the customer and providing some short-term customer price relief. If approved, the deferral would result in a nuclear charge of $6.69 per month per 1,000 kilowatt-hours (kWh) for residential customers in 2010 instead of $12.63 per 1,000 kWh, as allowed by the current law. These costs are for the planned plant in Levy County as well as improvements to increase the gross output at the existing Crystal River nuclear plant from 900 megawatts (MW) to 1,080 MW. The Crystal River plant uprate accounts for 30 cents of the requested amount. The PSC will hold hearings on the company's nuclear cost recovery in September and is expected to make a decision in mid-October.
"The Levy County nuclear project remains one of our company's top priorities, and we are committed to pursuing state-of-the-art new nuclear facilities in Florida, especially given the strong public policy support for nuclear energy at the state level," said Jeff Lyash, president and CEO of Progress Energy Florida. "Shifting this portion of the work until we have the combined operating license in hand enables us to spread some of the costs over a longer period. We believe this is in the best interest of our customers particularly during this continuing economic slowdown."
The company is continuing to pursue the Levy County project. A new project timeline depends on negotiations currently under way with the engineering, procurement and construction vendors.
"This shift in schedule provides time for the economy to recover, which should allow for financing in a more stable market. It also provides more time for national leaders to develop potentially transformational energy policies currently under debate in Washington," said Bill Johnson, president, chairman and CEO of Progress Energy. "To achieve the greatest reduction in carbon emissions at the least cost, advanced nuclear technology must be part of the solution. Having the license in hand and clearer federal climate change policy will ultimately decrease the risk to our customers and shareholders."
The Levy County nuclear project continues to be the best baseload generation option for Florida taking into account cost, potential carbon regulation, fossil fuel price volatility and the benefits of fuel diversification. A project of this magnitude and duration is a significant commitment and will be regularly assessed to ensure that it is in the best interests of customers and shareholders. Along with the company's annual prudence reviews with the PSC, Progress Energy will continue to evaluate the project in terms of public, regulatory and political support, including adequate cost-recovery mechanisms, and the availability and terms of financing for the capital necessary to build the plant.
It is too early for Progress Energy to provide a specific amount for an average customer's January 2010 bill or the cost for electricity per kilowatt-hour in 2010, as both will include other factors (base rate, fuel, energy conservation programs, government-mandated environmental projects, gross receipts taxes and local government fees and taxes) that are not determined yet, in addition to the nuclear project costs announced today. In October, the PSC is expected to make decisions on the company's 2010 base rates, which make up about one-third of a typical residential monthly bill. The company will file its projected fuel costs for 2010 in September. Fuel costs represent nearly half of a customer bill. Utilities earn no profit on fuel.
Progress Energy Florida, a subsidiary of Progress Energy (NYSE: PGN), provides electricity and related services to more than 1.6 million customers in Florida. The company is headquartered in St. Petersburg, Fla., and serves a territory encompassing more than 20,000 square miles including the cities of St. Petersburg and Clearwater, as well as the Central Florida area surrounding Orlando. Progress Energy Florida is pursuing a balanced approach to meeting the future energy needs of the region. That balance includes increased energy-efficiency programs, investments in renewable energy technologies and a state-of-the-art electricity system. For more information about Progress Energy, visit progress-energy.com.
Media contact: Progress Energy Florida 24-hour media line, 866.520.6397