Charge removed for Duke Energy’s Levy nuclear project

The Florida Public Service Commission announced April 16 that it has approved Duke Energy Florida’s (DEF) petition to end the fixed $3.45 charge (per 1,000 residential kilowatt hours) on customer bills related to the Levy Nuclear Project (LNP), beginning in May.

DEF is a utility subsidiary of Duke Energy (NYSE:DUK). Under the utility’s 2013 settlement agreement with the Office of Public Counsel and other customer representatives, the fixed charge was used to recover remaining Levy project costs.

In October 2014, the PSC ordered Duke to make an adjustment to 2015 expenses due to ongoing federal litigation over $54m in contractual payments for equipment not needed since the Levy project was cancelled. When making its decision, the commission anticipated that the ordered adjustment would end the Levy charge earlier than the original 2016 timeframe.

“The utility and the contractor are litigating, among other issues, whether the $54 million was earned by the contractor or should be returned to Duke. Ending the LNP charge benefits customers pending the outcome of the judicial proceeding,” said PSC Chairman Art Graham. “Our action today lowers customers’ bills and minimizes the potential for over collection of revenues compared to prudently incurred LNP costs before we determine a final true-up,” Graham added.

The PSC also denied the Florida Industrial Power Users Group motion to dismiss Duke’s petition to end the collection of Levy costs, finding the motion factually and legally incorrect, the PSC said.

Duke Energy Florida has said the Levy site remains a viable nuclear plant site further into the future. Duke will continue to pursue the combined operating license outside of the Nuclear Cost Recovery Clause with shareholder dollars as set forth in a 2013 settlement agreement.

Progress Energy, which would later merge with Duke, first applied with the Nuclear Regulatory Commission (NRC) the summer of 2008 for a combined construction and operating license (COL) for two reactor units at the Levy project site.

The boom in cheap domestic natural gas from shale; depressed electric demand after the economic recession and renewed nuclear power jitters after the Fukushima disaster in Japan are all factors that have combined to cause many nuclear operators to delay or cancel plans for new units.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.