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Duke won’t build Levy plant

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Proposed two-reactor nuclear power plant would have cost more than $18B

By Pat Faherty

Special to the Citizen 

 After five years and an estimated $1 billion, Duke Energy is canceling the proposed Levy County nuclear plant.

The two-reactor plant was expected to cost between $18 billion and $24 billion with estimated in-service dates of 2024 and 2025.

During the first six months of 2013, Duke spent approximately $59 million on the project and hoped to recover approximately $106 million from customers in 2014 to cover preconstruction costs.

Duke’s request for advanced nuclear funding for the Levy was to be considered by Public Service Commission next week. The PSC was also considering Duke’s request for $69 million to cover costs associated with the increase in output previously planned for the retired Crystal River nuclear plant.

But Duke’s announcement on terminating the engineering, procurement and construction contract for the Levy nuclear project is only part of a detailed revised settlement agreement filed Thursday with the PSC.

Developed with the Office of Public Counsel and other consumer advocates, the revisions to the 2012 settlement agreement contains provisions related to the CR3, the proposed Levy nuclear project, CR1 and CR2 coal units and future electricity needs in Florida.

The company also reaffirmed it is evaluating various sites including Citrus County, south of the Levy County site, for a new state-of-the-art, clean-burning natural gas-fired plant. 

The agreement is subject to PSC approval. According to Duke’s filing with the Securities and Exchange Commission, the company will continue pursuing a license for the Levy plant and recover related costs.

“The revised agreement represents an effective balance between moderating rate impacts to customers, providing clarity on recovery of past investments and allowing us to move forward with planning for Florida’s energy future,” said Alex Glenn, Duke Energy state president — Florida. “The most important thing to take away from this deal is this is going to provide longterm clarity for Florida customers including Citrus County and other stakeholders.

“Going forward it provides clarity related to CR3, great clarity in the Levy project and it provides great clarity on how we assess future generation needs.

“I think and believe, as do the other parties involved that it is an effective balance between moderating rates and recovering past investments.”

The Levy County project, off U.S. 19, north of the Cross Florida Barge Canal, about 10 miles from Crystal River, has long been eyed as an economic stimulus for the entire region. But it also faced continuing opposition from environmental groups and various politicians.

“While the decision announced by Duke Energy not to move forward on the Levy nuclear plant will have an impact on our local economy, Citrus County is still committed to working with Duke Energy as they explore all their options for future power generation sites,” said Citrus County Commission Chairman Joe Meek. “Citrus County will continue to work with Duke Energy now and into the future. 

“In addition, this decision highlights the absolute necessity for us to continue to work on ways to diversify our local economy,” added Meek, who also serves as president of the Economic Development Council. “It reaffirms the work we are doing focusing on industries and business, such as tourism, light manufacturing, agriculture and the medical and healthcare professions.”

“I’m very much pleased with that turn of events,” said Rep. Michelle Rehwinkel Vasilinda, D-Tallahassee. “People are starting to realize nuclear is not the answer for the environment, for the economy, not for jobs or national security.”

She has been an active opponent of nuclear cost recovery, has authored bills to repeal it and intends to file again next session. 

“The problem is we did not repeal it,” she said. “Collection of the fees goes on. We need to stop them from collecting the fees and go from there.”

“If we can get the gas plant here, that will be a significant tax base for us and will solve a lot of problems,” said Citrus County Commissioner Scott Adams. “It’s a win-win for us because it will give us some tax relief and create jobs. A lot of good things can happen out of this.”

A bill was signed into law this year putting new requirements on how utilities can recover costs for proposed nuclear plants. It appears to give the PSC wider discretion in approving future cost recovery. It also narrows the definition what costs can be recovered and sets time limits.

Regarding the Levy plant, Duke has argued the bill was not intended to be applied retroactively to preconstruction costs.

State issues aside, the Levy plant appeared poised for 2014 license approval by the Nuclear Regulatory Commission after clearing environmental hurdles. However, the agency has put new nuclear licenses on hold until it resolves the issue of disposing of nuclear waste.

The project was under fire from the Florida Ecology Party and other environmentalists for proposed use of more 1.5 million gallons of ground water a day.

“I am absolutely thrilled,” said Cara Campbell, ecology party chair. “It is nice to know after what I consider a pathetic ruling by the ASLB (Atomic Safety and Licensing Board) did not give credibility to our evidence and rubber-stamped it.

“I hoped the land will be preserved,” she said, noting this probably means the Tarmac King Road Mine would be built because it was part of the package. 

Contact Chronicle reporter Pat Faherty at 352-564-2924 or pfaherty@chronicleonline.com. 

Major components of the revised settlement agreement include:

* Addressing issues related to Duke Energy’s decision to retire CR3, CR3 costs to be recovered in customer rates and the acceptance of the Nuclear Electric Insurance Limited mediator’s proposal.

* Terminating the engineering, procurement and construction agreement for the Levy nuclear project.

* Establishing a framework for Duke Energy Florida to construct or acquire natural gas-fired generation.

* Allowing recovery of investments in CR3, the Levy nuclear project and the Crystal River 1 and 2 coal units. 

* Extending the company’s current base rate freeze an additional two years, through the end of 2018.