Florida Power and Light has suspended work on two new reactors at Turkey Point in an angry reaction to a decision by state regulators.
Turkey Point
Turkey Point: Two nuclear reactors,
two gas units and two oil units. An
additional two reactors are now in
serious doubt
The company said it would immediately stop work on expanding the Turkey Point power plant, citing the "deteriorating regulatory and business environment" created by the Florida Public Service Commission. The nuclear project is one among $10 billion in investment that FPL said will now be cancelled.
PSC officials today rejected an FPL's request to increase the rates charged to consumers - the way FPL had hoped to finance the investments. The company's regulated base rate had not been reviewed since 1985, and although it has twice been allowed to begin collecting extra money to aid investment, a request to add a total of $1 billion to its income after 2011 was slashed by the PSC to just $75 million.
"The decision was about politics, not economics," said FPL Group chairman and CEO Lew Hay.
FPL will continue to work with the Nuclear Regulatory Commission to complete its licence application to build and operate two Westinghouse AP1000s, but has abadoned its ambition to build them by 2017 and 2019.
About face
The move from the PSC comes despite officially accepting the need for the new reactors in March 2008. It was aware of FPL's cost projections and specifically approved spending to reserve the long-lead large components.
At the time, PSC chairman Matthew Carter said: "Trends indicate there will be a substantial need for more power in FPL's service territory, and these new nuclear units can help meet that need. The nuclear units will provide a clean, non-carbon emitting source of base-load power to meet Florida's growing energy needs."
"We understand that there is never a good time to raise base rates," said Hay, "However, our proposal provided a unique opportunity to lower customers total bills." The cost of finance is major part of the costs of nuclear power, and ability to raise funds from consumers lowers the costs to them overall. That state regulators could approve price increases timed to coincide with major nuclear investments had made projects like FPL's look the most likely to go ahead in the US market.
On 11 January, the Florida PSC also rejected a request to increase base rates from Progress Energy, planners of two AP1000s at a new site called Levy. Progress had hoped for a $500 million income boost to ease investment but has not announced any changes to its plans. The company's president and CEO, Vincent Dolan, said the decision "fails to recognize the true costs associated with providing a secure, reliable electricity system."
Besides Turkey Point 5 and 6, other projects on FPL's cancellation list are modernization of the Riviera Beach and Cape Canaveral non-nuclear power plants, a proposed natural gas pipeline and "numerous discretionary projects targeting improvements in efficiency and reliability." According to the company, the work could have created around 20,000 jobs.
Hay said that today's decision "will simply reinforce investor perceptions that the regulatory climate in Florida continues to deteriorate and is increasingly hostile to investment." He went on: "Investments have to be made in the expectation of fair regulatory treatment. By the time we ask for rate recovery, the money - in this case billions of dollars - already has been spent and sunk."
