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DUKE ENERGY SCRAPS FLORIDA REACTOR PLANS

Duke Energy scraps Fla. reactor plans – Kristi E. Swartz, E&E News reporter
Published: Tuesday, August 29, 2017

Duke Energy Corp. has permanently scrapped its proposed nuclear reactors in Levy County, Fla., adding to the list of canceled projects. The Levy County proposal is the second one that Duke has abandoned in less than a week. The other one was slated for South Carolina. The utility’s decision was part of a wide-ranging settlement, announced this morning, with Florida’s Office of Public Counsel and other stakeholders in connection with a rate case. Still, Duke’s move has broader meaning for the nation’s baseload nuclear industry. The company’s proposed reactor projects were part of more than two dozen license requests, filed years ago, in various stages before the federal Nuclear Regulatory Commission. Many of those applications have been pulled or are on hold. Also, Duke’s reactors were to use Westinghouse Electric Co. LLC’s AP1000 design. The mega-contractor filed for Chapter 11 federal bankruptcy protection earlier this year, throwing projects into doubt.

Flat electricity demand, an abundance of natural gas at cheap prices and the falling cost of renewable energy all have cut into the future of nuclear as a baseload option. As a result, five nuclear plants in competitive power markets have either closed or announced plans to close since 2013. That two projects have been shelved in regulated power markets within days of each other shows the difficulty of making the economics for nuclear work there, as well.

“Utilities make decisions about generation based on anticipated need,” said John Keeley, spokesman for the Nuclear Energy Institute, the industry’s trade group. “But in our current era of flat demand for electricity,” he said, “there isn’t much justification for large new generators of any type.”

Westinghouse filed for bankruptcy in March because of rising costs at projects in Georgia and South Carolina. The move goes to nuclear’s Achilles’ heel: The reactors are expensive to build and place significant financial risk on the utilities, contractors and their customers. Indeed, Scana Corp.’s South Carolina Electric & Gas Co. and state-owned Santee Cooper stopped building two reactors at V.C. Summer when the costs were too great for customers to bear.

All eyes on Vogtle
That decision has left Southern Co.’s Vogtle nuclear expansion project in southeast Georgia as the lone set of reactors under construction. Southern’s Georgia Power unit is scheduled to formally tell investors and state regulators whether it will finish Vogtle on Thursday. Analysts have said they expect the company to finish the project; the key question is the details in who pays for the additional costs.

Aside from Vogtle, Florida Power & Light Co. remains the only electric company with an AP1000 combined operating license application pending before the NRC, according to the agency. The utility continues to pursue a license to add two reactors at its Turkey Point nuclear plant near Miami, but it has not decided whether it will actually do so. A mandatory hearing on the license is “under review” at the NRC.

Westinghouse’s bankruptcy was one of the main reasons Duke shelved its William States Lee III nuclear station near Gaffney, S.C. Rising costs to build the reactors and the increased availability of natural gas and solar are other factors, the utility said late last week. Duke will keep the NRC-issued license in case it decides to pursue the projects later. Duke’s Florida unit has not discussed building reactors in Levy County, on the west coast, in years, but the utility has maintained that it was “preserving the option” to do so. Today’s settlement officially stops the project.

“The company will also no longer move forward with building the Levy Nuclear Project, and customers will not pay any further costs associated with the project,” Duke Energy Florida said in a statement. Duke has agreed to write off a wide range of costs associated with Levy, including the land, post-licensing charges and costs stemming from a lawsuit with Westinghouse over the canceled contract. Officially stopping Levy’s reactors from moving forward was a key objective for the Office of Public Counsel, which represents Florida’s consumers in utility cases.

“The important thing is, they will write off” the combined operating license, said Charles Rehwinkel, deputy public counsel. Duke has also agreed to build more solar, add a battery storage project and set up an electric vehicle pilot program. A small rate increase remains in place, but it is lower now that Duke will absorb millions in nuclear-related costs.

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