Granted Modest Rate Hikes, Utilities Delay Construction
Delays in developing large power projects in Florida are bad news for contractors in a state already hurt by sharp construction downturns, says the Greater Florida Chapter of Associated General Contractors president.
Florida’s biggest utilities, Juno Beach-based Florida Power & Light (FP&L) and Progress Energy Florida, “stopped work on everything but the essentials” after the state Public Service Commission (PSC) in January rejected most of the big rate increases the utilities had sought, said Richard Marshall, who also is vice president of operations at the Tampa office of Walbridge, a large construction firm based in Detroit.
FP&L was granted $75 million of its proposed $1.3-billion rate hike. The utility suspended work on $10 billion in projects, while it assessed the impact of the rate decision on the utility’s creditworthiness and cost of capital.
The affected projects included FP&L’s plan to replace 1,360 MW of oil-fired capacity at Riviera Beach and Cape Canaveral with new, 1,250-MW natural-gas-fired combined-cycle units at each site, build two new Westinghouse AP1000 nuclear units at its Turkey Point station and put in place a natural-gas pipeline.
FP&L President and CEO Armando Olivera announced earlier this month the Riveria Beach and Cape Canaveral plant upgrades would still be built and completed in 2013 and 2014, respectively, after an analysis said the projects would benefit customers. However, FP&L delayed the pipeline decision until next year and pushed back the planned online dates for Turkey Point nuclear units to 2022 and 2023, a three- to four-year delay.
Progress Energy Florida, a subsidiary of Raleigh, N.C.-based Progress Energy, also has delayed construction of two nuclear units planned for a greenfield site in Levy County. Progress now plans to start commercial operation of the first reactor in 2021 and bring the second unit online about 18 months after that. Progress initially had planned to complete the Levy units in 2016 and 2018.
The reactors were delayed even further after PSC gave Progress only $132 million of the $499-million increase it sought. Last year, Progress indefinitely delayed its plan to build a 1,200-MW gas-fired combined-cycle unit at its Suwannee plant. The utility had planned to begin commercial operation of the unit by mid-2013 but said slack demand makes the project unnecessary at this time.
This article originally appeared on ENR.com.