Costs Double To Upgrade FPL Capacity

The cost of increasing the capacity at Florida Power & Light Co.\’s four nuclear reactors has escalated to $3 billion, a jump of roughly $600 million since the company\’s estimate last year. That\’s double the original estimate.

\”The amount for these uprates is increasing at an alarming rate,\” said Florida public counsel J.R. Kelly, the state\’s advocate for utility customers.

FPL is increasing the generating capacity to its existing reactors at its St. Lucie nuclear plant on Hutchinson Island and its Turkey Point plant in Miami-Dade County. About three-fourths of the project will be completed by the end of this year. So far, 31 megawatts has been added, with 336 megawatts more coming online this year, and the final 123 megawatts in 2013.

In 2009, FPL told the Florida Public Service Commission that the two projects would cost $1.5 billion. Since then the project\’s capacity has increased from 450 megawatts to 490 megawatts, enough to power 311,000 homes.

The latest cost estimate range is $2.95 billion to $3.15 billion, up from last year\’s estimate of $2.32 billion to $2.48 billion, Terry Jones, vice president of nuclear uprates, said in April 27 testimony filed with the Florida Public Service Commission.

A year ago, 36 percent of the engineering had been completed, but now it\’s 90 percent complete, Jones said. The higher cost reflects increased Nuclear Regulatory Commission requirements, design evolution, and construction and implementation logistics, he said.

On average, more than 3,400 people, nearly all in Florida, are being employed throughout 2012 to accomplish the uprates, Jones said. Customers will pay for the uprates over the units\’ lifetimes.

\”Simply put, the additional cost mainly reflects that more engineering, labor and supervision work is needed to complete the installation of the upgraded equipment in the plants,\” FPL spokesman Mike Waldron said.

FPL estimates that the uprates will save customers a total of $3.8 billion in fossil fuel costs over the units\’ lifetimes, with $114 million in savings in the first full year of operation. Carbon dioxide emissions will be reduced by an estimated 32 million tons.

Public counsel Kelly said he argued before the PSC last year that FPL uses an incorrect methodology in its annual feasibility analysis.

\”It ignores or excludes sunk costs, those that have already been spent, and only looks forward,\” Kelly said. \”With that type of methodology, a project may always look feasible and could be $5 billion. The commission did not agree with our argument. We can bring it back to the commission.\”

For 2013, FPL is seeking $151 million in advance nuclear costs from customers, down from $196 million this year. If the PSC approves the request, the typical 1,000-kilowatt-hour monthly customer bill for nuclear costs that customers pay before construction is completed would decrease by 51 cents from $2.20 to $1.68 next year. In addition, that customer will pay $2.24 a month for the completed uprates.

If a proposed base rate increase is approved, the typical customer will pay a net increase of $1.41 a month beginning in June 2013.

James Whitlock, an attorney for the Southern Alliance for Clean Energy, said the escalating costs are typical of nuclear uprates and new reactors, and it has told the PSC it needs to \”stop the bleeding for Florida consumers.\”

\”We\’ve been right. Every year they\’ve been going up,\” Whitlock said.

The alliance, which is leading a challenge to the constitutionality of a statute that allows advance recovery for certain nuclear costs before the Florida Supreme Court, said the statute does not give adequate direction. The statute applies to both new reactors and uprates.

\”It is being treated as a blank check. That is not what it was ever intended to be,\” Whitlock said.

Jerry Paul, a former reactor engineer and the former deputy administrator of the U.S. National Nuclear Security Administration, said, \”The low operating costs make nuclear the cheapest base load form of energy even though construction costs are higher. If you want cleaner air and you want cost effective electricity, nuclear power has to be part of the mix.\”

Source:  Palm Beach Post

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