This blog was written by Sara Barczak, former Regional Advocacy Director with the Southern Alliance for Clean Energy.

Guest Blog | September 12, 2012 | Energy Policy, Nuclear, Utilities

Several weeks ago, Southern Alliance for Clean Energy’s John D. Wilson wrote about the continuing drama of the Duke – Progress utility merger that reflects an ongoing struggle for the future of utilities. It has been reported that concerns about Progress Energy’s management of its nuclear fleet were a source of friction between Duke and Progress during the merger. Beyond that substantive issue, one of John’s comments foreshadowed some flip-flopping by Duke Energy over future nuclear plans in Florida.

John commented that, “different motivations within the utility coalesce in an unexpected choice.” We are seeing different motivations with respect to Duke Energy’s plans for nuclear energy in Florida on full display. There are two big questions: Will they repair the “Humpty Dumpty” cracked Crystal River nuclear reactor that has been offline since 2009? And will they actually build the runaway-budget, proposed two new reactors in Levy County?

Crystal River – Mend It or End It?

With a final estimated price for repair somewhere well north of $1 billion, the “Humpty Dumpty” reactor — which may well be unsalvageable at any price — continues to be in play. And by “in play” we mean that customers will have to pay.

Progress Energy originally claimed it could keep the costs for repairs below $1.3 billion, but now that has been deemed likely too low by Jim Rogers, CEO of Duke. We turned down a settlement agreement last February that dealt with Crystal River because we knew it would be a bad deal for ratepayers. At last report, it will be October (at least) before Duke makes up its mind and presents customers with the bill to mend, or end, the broken Crystal River nuclear reactor.

Levy Reactors – Maybe? Maybe Not?

In Monday’s nuclear cost recovery clause hearing before the Florida Public Service Commission, Duke Energy staff demonstrated either a shocking lack of internal communication, or gave us a glimpse into an internal struggle over whether to double down on a costly nuclear gamble.

Recall that on August 13, Jim Rogers met the Florida Public Service Commission in what was represented as an “off the record” public hearing. Whatever that is.

Contrast this summary of Jim Rogers, Duke Energy (August 13th):

As for the proposed Levy County plant, Rogers said there were many factors that would determine its future.

The project is contentious, with an estimated cost steadily increasing. It now stands at $22.4 billion; the original was about $14 billion. By the end of this year, Progress estimates that it will have collected $625 million from customers for the project through Nuclear Cost Recovery.

The company will have spent another $310 million but will collect that later from customers. Completion date has been shoved back from 2016 to 2021.

Before making a decision whether to build the plant or push back its construction even more, Rogers said he would first:

• See whether Duke gets a construction license from the Nuclear Regulatory Commission for the proposed Levy Co. reactors.

• Determine whether the cost of natural gas increases.

• Determine whether there will be a tax on carbon emissions.

• See whether Florida’s growth returns to pre-recession era trends.

PSC member Eduardo Balbis said he was pleased with how Rogers assured the Commission that communications with Duke would be as forthright as it had been with Progress. He said he also was impressed by how open Rogers was about the Crystal River plant issue and the Levy County plant future.

… with this summary of Jeff Lyash, Duke Energy (September 10th):

Duke Energy executive Jeff Lyash told state regulators Monday that the estimated $24 billion Levy County nuclear plant will get built and come online in 2024.

“We’ve made a decision to build Levy,” said Lyash, executive vice president for power generation. “I’m confident in the schedule and numbers.”

A decision to move forward with the Levy project could cause electric bills to soar, beginning with an additional $20 a month for the average customer in 2018.

…

Lyash’s adamant position about Levy surprised advocates for consumers, who questioned whether Lyash heard or read Rogers’ comments from last month.

Lyash said, “no.”

“I simply want to know if the company has made the decision to build Levy, and the answer is, ‘Yes?’ ” asked James Whitlock, a lawyer for the Southern Alliance for Clean Energy, an environmental group.

“That is correct,” Lyash responded. He added that the company regularly reviews feasibility of any project, but Levy’s plans continue to move forward.

Notice anything different? Wonder why the difference?

When Rogers spoke, it was “off the record.” When Lyash spoke, he was presenting “evidence … to help make future decisions about what customers pay toward the nuclear projects.”

As the Tampa Bay Times opined, “There is no rational argument to force Progress Energy customers to keep paying in advance for a nuclear plant that is too expensive and too far down the road.”

The merger of Duke Energy and Progress Energy offers an opportunity to take a fresh look at Progress Energy Florida’s resource portfolio. The merger affords the Duke Energy Board the opportunity to leave a legacy in Florida of transforming the utility, over time, into a lower-cost and least-risk utility that regains customer and market confidence. Will Jim Rogers step forward and go “on the record” with such a vision or will it be more of the same in Florida — pursuing high cost, high risk new nuclear generation at the expense of Florida families and businesses?