Duke Energy reached a settlement with the state of Florida that allows the Charlotte, N.C.-based utility to keep $1 billion in advance fees collected from ratepayers that would have financed a cancelled $24.7-billion nuclear plant project, while clearing the way for additional funding of a planned 1800-megawatt natural gas plant.

Image courtesy Duke Energy
Duke Energy announced Aug. 1 that it is ending plans to build a $24.7-million nuclear powerplant project in Levy County, Fla., that was first proposed in 2008.

The utility cited recent changes in the state’s nuclear advance cost recovery law for its Aug. 1 decision to cancel construction plans for the controversial project in Levy County.

"As a result of delays by the [Nuclear Regulatory Commission] in issuing [combined operating licenses] for new nuclear plants, as well as increased uncertainty in cost recovery caused by recent legislative changes in Florida, Duke Energy will be terminating the EPC agreement for the proposed Levy nuclear project," Duke announced in a statement.

"The uncertainty created around the legislation was certainly one factor we used in reaching the agreement with our consumer advocates," added Duke spokesman Sterling Ivey.

Progress Energy Florida, since merged with Duke, in 2008 hired Shaw Group—now CB&I—and Westinghouse as its EPC contractor for the project, with plans to build two 1,100-MW nuclear units at a greenfield site in Levy County. At the time, the project's cost was estimated at $14 billion.

The project and its cost increases had been a focus of Florida legislators when they enacted restrictions on the state’s nuclear cost recovery law earlier this year.

The settlement allows the utility to continue collecting advance fees for the project through 2014, for a total of approximately $1 billion. Duke has also collected and spent roughly $500 million in advance fees related to botched repairs at its Crystal River 3 nuclear plant in Citrus County.

Duke says it will continue to seek a license from the NRC for the Levy County site, noting that it is nearing the end of the licensing process. While admitting that the change in construction plans "might" have an impact on the NRC’s consideration of the application, Ivey said Duke is anticipating an decision by the first half of 2015.

"We think the Levy site is still a good viable site for future [nuclear] generation," Ivey says. "If the economic conditions change in the next five to 10 years, having that license on hand to revisit building a potential nuclear plant in Levy County … affords us that option."

The utility has commenced discussions with CB&I and Westinghouse about winding down the existing contract. Work performed to date includes land acquisition, design and engineering, and the purchase of some equipment, such as generators, Ivey says. When contacted by ENR, CB&I referred all questions to Duke Energy.

The settlement also clears the way for funding a planned 1,800-MW plant by allowing Duke to add related costs to customer base rates "without prolonged hearings like you would normally have," says Ivey. "It basically streamlines the process for us to move forward with construction."

As part of its agreement with the state, Duke will be allowed to purchase 1,150 MW of additional power through 2017. As a result, the utility will need to have the proposed natural-gas plant online by 2018.

To meet that timetable, construction must begin within the next 12 to 24 months, Duke says. Though still evaluating potential sites, Duke expects to issue a request for proposals by the end of 2013.