Energy industry

Future of nuclear power in Florida cools off

 
 
The Turkey Point Nuclear Power Plant in Homestead on Wednesday, Nov. 16, 2011.
The Turkey Point Nuclear Power Plant in Homestead on Wednesday, Nov. 16, 2011.
ALLISON DIAZ / FOR THE MIAMI HERALD
WEB VOTE Now that Duke Energy Corp. has postponed plans to build two nuclear reactors on Florida’s Gulf Coast, should Florida Power & Light reconsider its plan to add two more reactors to its Turkey Point plant on Biscayne Bay?

cmorgan@MiamiHerald.com

The future of the nuclear energy industry in Florida appears to be dimming.

Duke Energy Corp. on Thursday announced it had indefinitely postponed plans to build two new reactors in sparsely populated Levy County on the Gulf Coast, citing federal licensing delays and economic concerns. Those are topped by spiraling construction costs and uncertainty over whether Florida regulators and lawmakers will continue supporting controversial “cost-recovery’’ policies allowing utilities to bill customers in advance for plants with multibillion-dollar price tags.

The decision by the nation’s largest utility is the latest sign of cooling enthusiasm for nuclear power nationwide. It promises to increase scrutiny of Florida Power & Light’s plan to add two more reactors to its Turkey Point nuclear power plant on south Biscayne Bay.

Erik Hofmeyer, an FPL spokesman, said the utility constantly reviews changes in energy markets but remains committed to obtaining a license from the Nuclear Regulatory Commission for two next-generation reactors he said would save customers $78 billion in fuel costs over decades of operation.

“That’s extremely important, and we continue to pursue both state and federal approval,’’ he said.

While Duke left the window cracked open for a future reactor, environmentalists and other critics still said the utility’s move — driven by high reactor costs and plunging prices for natural gas and “alternative energy” options like solar power — bolstered their arguments that FPL should abandon its own expansion plans.

“Duke really has looked at the bottom line and concluded they weren’t going to make their money back, at least any time soon,’’ said South Miami Mayor Philip Stoddard, who is among a number of political leaders from Kendall to Coral Gables fighting FPL’s expansion and an associated high voltage power line corridor through their communities.

“What they’re trying to pull off at Turkey Point is a lot harder and more expensive,’’ he said.

Stoddard scoffed at FPL’s cost projections of $12 billion to $18 billion. Duke’s initial estimates of $10 million for two similar reactors at the Levy County site had most recently topped $24 billion. Stoddard said Turkey Point would also require extensive additional work, including a pipeline and processing plant for treated sewage that would be used to cool reactors and a network of wells that would serve as a backup supply.

George Cavros, Florida energy policy attorney for the Southern Alliance for Clean Energy, said “economic drivers’’ had changed significantly since FPL and Duke filed applications to build the new plants in 2008 as part of a wave of two dozen proposed reactors across the country.

Theirs were the first new nuclear plants proposed since the 1970s, but what seemed an industry rebound a few years ago has lost steam. Only five new reactors are actually under construction at three sites in Georgia, South Carolina and Tennessee — all states with similar “cost-recovery” policies that help utilities finance projects.

In the meantime, Cavros said, demand for electricity has dropped as a result of the sputtering economy. Natural gas has become plentiful and cheap thanks in large part to the environmentally questionable practice of hydraulic fracturing, better known as “fracking.’’ Japan’s Fukushima disaster in 2011 also renewed public questions and weakened political support.

Cavros said the economic analysis FPL used to justify the expansion to the Florida Public Service Commission has expired and should be reviewed.

“Our contention is the plant is no longer feasible when compared to lower-risk, lower-cost options,’’ he said.

Other utilities have already walked away from proposed projects and aging reactors. Early this year, Duke announced it was pulling the plug on another Gulf Coast plant on the Crystal River, shut down since a botched repair cracked a reactor containment building in 2009. It also told the NRC it was dropping plans to expand a North Carolina plant.

Other companies this year also have mothballed two old reactors in California and another in Wisconsin.

Perhaps more important, investors have cooled. Daniel Eggers, who directs a team of utilities analysts at Credit Suisse Securities in New York, summed up the powerful economic head-winds slowing industry progress.

“In a competitive market, you can’t even come close to making the math work on building new nuclear plants,’’ he told Bloomberg Businessweek earlier this month. “Natural gas is too cheap, demand is too flat and the upfront costs are way too high.’’

But proponents argue nuclear power must remain a crucial part of the state’s and nation’s energy future.

Steven Kerekes, a spokesman for the Nuclear Energy Institute, the industry’s Washington, D.C., trade organization, acknowledged cheap natural gas may be influencing utilities in the short-term, but argued it would be risky to depend too much on a single fossil fuel. Natural gas, for instance, now supplies 70 percent of Florida’s power.

Once a nuclear plant is built, costs remain more stable than with fossil fuels, Kerekes said, and reactors produce none of the green-house gasses fueling climate change.

“We believe the fundamentals that are in place regarding nuclear energy continue to be strong for the long run,’’ he said.

He also said critics have inflated industry troubles, saying far more aging coal- and gas-fired plants have been shuttered over the last few years because they were inefficient and too expensive to upgrade.

And while Duke Energy has abandoned immediate construction plans, spokesman Sterling Ivey said the utility still considers its site in Levy, west of Gainesville, a viable option for a nuclear plant and is continuing to pursue NRC approval that would potentially clear the way for future construction. FPL is pursuing similar approval but has yet to formally commit to the construction of reactors at Turkey Point.

Ivey said Duke doesn’t want to lose the time and money it has already invested toward obtaining a license that would grant it authority to run a nuclear reactor for 40 years — if and when it makes financial sense.

“We can preserve the option for nuclear in Florida 10, 15 years down the road,’’ he said.

NRC spokesman Roger Hannah said decisions have been held up by a federal court ruling mandating the agency analyze environmental impacts of permanently storing spent nuclear fuel at power plants. A proposed federal repository has never been built. Hannah said a ruling on the waste issue is expected early next year.

The Florida Public Service Commission is scheduled to meet Monday to consider Duke’s proposal to suspend its Levy County project as well as new cost-recovery petitions from Duke and FPL.

Those upfront collections have drawn considerable fire in Florida, with some critics and lawmakers arguing they pass risks and costs to consumers while protecting company shareholders.

FPL’s Hofmeyer said the program had helped pay for $3.2 billion in upgrades that increased the output and efficiency at existing reactors in St. Lucie County and at Turkey Point. With that work complete, he said, the cost-recovery rate would drop from $1.65 to 48 cents per 1,000 kilowatts.

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