Progress Energy will postpone major construction activities at its proposed Levy County nuclear plant in Florida until after the project’s federal licensing is complete. The company last week said in a statement announcing its 2011 filing of nuclear cost-recovery estimates that the delay would allow for “greater clarity on federal and state energy policies.

It would also lower near-term price impacts on customers, allow the economy more time to recover before the company completes major construction work on the project, and allow the company to benefit from experiences of other companies building new nuclear plants in the next few years, said Vincent M. Dolan, president and chief executive officer of Progress Energy Florida. “This will give us greater certainty regarding the price and the final construction schedule.”

Progress Energy had applied for the project’s combined construction and operation license (COL) in August 2008. If the Nuclear Regulatory Commission’s (NRC’s) schedule remains on track, the company said it expects to receive that license in late 2012. By then, several factors should be resolved—including public, regulatory, and political support, adequate cost recovery mechanisms, capital financing, and total project cost—allowing the company to make a sound decision,  it said.

The company told regulators that the Levy nuclear project could cost between $17.2 billion and $22.5 billion, including land, transmission lines, fuel, and financing costs. “This is consistent with estimated costs of other, similar projects under development. However, today’s filing includes an analysis of the project that demonstrates feasibility even with the more conservative estimate,” it said.

The company’s cost-recovery filing also includes estimated costs for 2010 and projected costs for 2011 for the Crystal River 3 uprate project. Under state law, a utility can recover certain project-related costs—site selection, pre-construction, operations, maintenance, and financing costs—over the construction period, following an annual regulatory review.

For 2011, the company said it was looking to recover $164 million in nuclear costs—including the Levy plant and investments to increase production capability at the Crystal River Nuclear Plant.

The company had announced a year ago that it would delay the plant’s construction schedule so that operation of the two Levy units would begin in the 2016–2018 period.

Examples of work being deferred until after the NRC issues the COL include design of the plant property and transmission lines, certain land acquisition for the transmission lines, construction of the barge slip and nuclear training facility, and clearing and other site preparation. “Work to obtain the COL will continue, such as supporting the NRC’s information requests during the review process. Environmental permitting also will continue,” the company said last week.

The announced delay follows Florida Power & Light’s (FPL’s) recent announcement that it would suspend activities on several major projects in the state’s energy infrastructure, including development of two nuclear reactors at Turkey Point. The utility’s decision was made after the Florida Public Service Commission (PSC) unanimously rejected a request to raise rates by 30%, or nearly $1.3 billion. Commissioners cited the economic downturn for their decision, saying, “Utilities are just going to have to make do in these difficult economic times.”

Progress Energy said that the slowed spending on the Levy project was also influenced by the PSC’s “stated desire to avoid any rate increases in the short term.” Other factors included a recent downgrade to Progress Energy Florida’s credit ratings as a result of  “increased business risk due to regulatory decisions and economic conditions in Florida,” a delay in the NRC’s licensing timeline, and “continued uncertainty about federal and state energy policies”—including carbon regulation.

Sources: POWERnews, FPL, Florida Public Service Commission