May 1, 2009 / 11:46 PM / in 11 years

Progress delays Florida nuclear project 20 months

HOUSTON, May 1 (Reuters) - Progress Energy’s PGN.N Florida utility will delay the construction timeline for its $14 billion nuclear plant in Levy County and scale back early charges to pay for the plant, the company said on Friday.

Florida’s second-largest utility said a 20-month delay in the construction schedule for two 1,105-megawatt, AP1000 reactors will push commercial operation of the first unit to 2018, rather than 2016 as currently envisioned. A second reactor at the site could begin operation about 2020.

The schedule change follows a ruling by the U.S. Nuclear Regulatory Commission that prevents certain excavation and foundation work until Progress receives a license to construct and operate the plant, the utility said in a statement.

Progress had hoped to proceed with the foundation work ahead of the issuance of a license, expected by early 2012.

An NRC spokesman said the determination was based on geologic characteristics of the Levy site.

While the Levy County nuclear station remains a “top priority,” the delay may be best for customers’ wallets, given the severity of the economic slowdown in Florida, said Jeff Lyash, Progress Energy Florida president.

“Shifting this portion of the work until we have the combined operating license in hand enables us to spread some of the costs over a longer period,” Lyash said.

The delay may also improve the project’s chances of being built.

The shift “provides time for the economy to recover, which should allow for financing in a more stable market,” said Progress Energy Chief Executive Bill Johnson.

For a second time, Progress asked state regulators to reduce the amount it will charge customers to help pay for the new nuclear station and work to boost output at Progress Florida’s Crystal River nuclear station by 180 megawatts.

The utility seeks approval to spread Levy’s early cost recovery over five years to lessen the impact on monthly customer bills.

If approved, the deferral would result in a 2010 nuclear charge of $6.69 per month for a customer using 1,000 kilowatt-hours, down from $12.63 allowed under Florida law.

In March, Florida regulators approved a Progress request to reduce the 2009 monthly nuclear charge by nearly $8, to $3.62.

Florida lawmakers were among the first in the nation to allow utilities to collect nuclear costs ahead of construction as a way to advance Gov. Charlie Crist’s effort to address global warming concerns by reducing Florida’s carbon dioxide emissions.

A new timeline for the Levy County project depends on negotiations under way with contractors Westinghouse Electric Co (6502.T) and The Shaw Group SGR.N, Progress said. (Reporting by Eileen O’Grady ; Editing by Marguerita Choy)

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