Duke to pursue further cost recovery at Fla. PSC for Levy nuke project

Friday, August 02, 2013 5:58 PM ET Exclusive
Duke to pursue further cost recovery at Fla. PSC for Levy
nuke project

By Matthew Bandyk

Duke Energy Florida Inc. plans to attempt to collect hundreds of millions of dollars in costs for the $24.1 billion Levy County nuclear project that the
utility admitted in a settlement agreement announcement Aug. 1 that it has elected not to build at this time.

The settlement agreement provides that a charge on the bills of Duke customers, currently set at $3.45 per 1,000 kWh for a residential customer,
will pay down about $350 million of the remaining balance of costs for the Levy project.

That figure includes about $106.1 million in Levy costs for calendar year 2014 that Duke asked for approval from the Florida Public Service
Commission earlier this year, according to Duke spokesman Sterling Ivey. Those costs come on top of about $962 million that Duke spent on the Levy
project through the end of 2012, according to testimony the utility filed with the commission.

A law passed by Florida lawmakers in 2006 explicitly allows a utility that "elects not to complete" a nuclear project to recover all "prudent
preconstruction and construction costs." In the settlement, the Duke Energy Corp. subsidiary said it will exercise this subsection of the statute and
"will elect not to complete the construction of the [Levy project]."

Critics of the Florida law have responded that the fact that Duke can continue with cost recovery despite leaving so much investment on the table
proves their position that the law was unfair in the first place.

"Shame on Duke Energy, Progress Energy for taking the public on this ride knowing that they were never going to build the nuclear plants. Shame on
them," state Rep. Mike Fasano told the Tampa Bay Times shortly after the settlement was announced Aug. 1. Fasano attempted to rally the
Legislature to repeal portions of the law, but the result was a more conservative bill, signed into law in June, that put only modest restrictions on
nuclear cost recovery instead of removing recovery completely for projects that were not guaranteed.

But even the conservative bill was enough to influence Duke to pull back on the new nukes. In a statement announcing the settlement, the utility cited
the bill as a driver for "increased uncertainty in cost recovery."

Fasano, a Republican, entered into an alliance with environmental groups opposed to the law. Those groups included the Southern Alliance for Clean
Energy, which led a lawsuit to overturn the law that was ultimately rejected by the state Supreme Court.

In reaction to Duke's decision, the Southern Alliance is now arguing that the PSC should not allow the other large utility in the state, Florida Power &
Light Co., to spend money for a project that also could be suspended. The NextEra Energy Inc. subsidiary has asked the PSC to approve $28.6
million for nuclear cost recovery. Only part of that request covers work on the proposed new reactors at the Turkey Point plant. Most of the spending is
for the 500-MW power uprate the utility recently completed at the existing Turkey Point units as well as the St. Lucie plant.

"We need to really focus on why Florida Power & Light thinks that they, while everyone else is clearing the playing field, can continue to perpetuate
this fleecing of ratepayers," Southern Alliance for Clean Energy Executive Director Stephen Smith said in a conference call Aug. 2.

The group plans to ask that question at a series of hearings starting Aug. 5 in which the PSC will examine the utilities' nuclear cost recovery requests
(Docket No. 130009).

FPL spokesman Erik Hofmeyer said the utility cannot comment on Duke's decision. But he said that despite the recent changes to the cost recovery
law, the utility is still moving forward with the Turkey Point project. FPL is pursuing its license from the Nuclear Regulatory Commission and it expects
to receive a state certification for the project from the Florida Department of Environmental Protection later this year, Hofmeyer said.

Meanwhile, Duke will still be working toward a license for Levy County, but it will not be asking for cost recovery for any further spending. Work
unrelated to the NRC license, such as preconstruction planning and site preparation, will be discontinued, according to Duke spokesman Rick
Rhodes.

In testimony breaking down the $106.1 million request, Duke said it projected $12.1 million in preconstruction costs. But in a separate piece of
testimony, the exact amount of the request that came from work on the license application was redacted.

Rhodes said it is too early for the utility to estimate what its spending on the license work will be in 2014.