Florida PSC okays Florida Power and Light costs for Turkey Point nuclear project

On a unanimous vote, the members of the Florida Public Service Commission on Oct. 19 approved cost recovery for Florida Power and Light for the unbuilt Turkey Point 6 and 7 nuclear units.

The commission approved as reasonable what FPL has submitted as its 2015 annual detailed analysis of the long-term feasibility of completing the Turkey Point Units 6 and 7 project. Although uncertainty surrounding all these aspects of the project exists, the commission agreed with its staff that FPL has demonstrated adequate management of project risks. Staff recommended that the commission approve as reasonable FPL’s 2015 feasibility analysis of the Turkey Point Units 6 and 7 project.

The commission found that the current total estimated all-inclusive cost of the project is a range of $13.7 billion to $20.0 billion. The commission also found that the currently planned commercial operation dates of the project are June 2027 for Unit 6, and June 2028 for Unit 7.

The commission found that FPL’s 2014 Turkey Point Units 6 and 7 project management, contracting, accounting and cost oversight controls were reasonable and prudent. The commission approved $23.6 million as FPL’s final 2014 prudently incurred costs and an over recovery of $691,433 as the final 2014 true-up amount for the project. The commission approved $25.4 million as FPL’s reasonably estimated 2015 costs and an under recovery of $6.1 million as the estimated 2015 true-up amount for the project.

Environmental group says commission ignored evidence against this project

The Southern Alliance for Clean Energy on Oct. 19 blasted the commission’s decision. “With this approval, since 2008 the PSC has granted FPL more than $280 million in early cost recovery for costs associated with two proposed reactors at the existing Turkey Point nuclear plant near Miami, despite any commitment from the utility to actually build the reactors,” the alliance said. “The Commission ignored many serious concerns, including the economic feasibility of the reactors raised by the intervening parties: the City of Miami, large industrial and commercial customers, the Office of Public Counsel and the Southern Alliance for Clean Energy (SACE).”

“Despite overwhelming arguments to the contrary, the Commission again gave FPL what they want at the expense of Florida’s businesses and families for increasingly speculative nuclear reactors that will likely never be built,” said Dr. Stephen A. Smith, executive director of the Southern Alliance for Clean Energy.

The alliance said that during the proceeding, FPL conceded that its cost estimates had not taken into consideration significant cost overruns of $4 billion at the Toshiba-Westinghouse AP1000 reactors under construction at Southern Co.’s Plant Vogtle in Georgia. FPL is proposing the same reactor design for Turkey Point. The alliance said that SCANA’s AP1000 expansion at the V.C. Summer plant in South Carolina also has cost overruns and significant construction delays. Additionally, FPL put forth an unrealistic non-binding cost estimate of up to $20 billion, the alliance said. FPL’s proposed reactors are more than a decade from completion, currently projected for 2027/2028, if they are even built, and have experienced repeated cost increases and scheduling delays.

SACE has argued that Florida has far better energy choices. Energy efficiency not only can help customers save money on their electric bills by reducing their energy use, but it is also the lowest cost resource in meeting electricity demand at an investment of less than 3 cents per kWh. This is a fraction of the levelized cost of the proposed Turkey Point reactors, which is almost 17 cents per kWh.

FPL says this project is needed, and costs so far have been prudently incurred

In a Sept. 4 brief filed in this case, FPL noted that in 2006 the Florida State Legislature enacted new law to encourage investment by electric utilities in additional nuclear generation. In 2007, in response to this state policy, FPL applied for a determination of need from the commission for the Turkey Point 6 and 7 new nuclear project. In 2008, the commission approved the project. In 2014, the state Power Plant Siting Board approved FPL’s Site Certification Application (SCA), certifying the project and all associated transmission lines and facilities. In 2017, FPL anticipates it will receive its Combined License (COL) for the project from the Nuclear Regulatory Commission.

The Sept. 4 brief added: “The results of FPL’s 2015 feasibility analysis present a strong case for continuing the Turkey Point 6 & 7 project. In more than half of the scenarios evaluated, Turkey Point 6 & 7 is projected to be the clear economic choice for FPL’s customers. And in all scenarios, the proposed new units greatly reduce fuel costs and reduce emissions. For example, using the medium fuel forecast/environmental compliance cost scenario and a conservative 40-year operating life of the plant, Turkey Point 6 & 7 is projected to save customers $47 billion (nominal) in fuel cost savings over the life of the plant, reduce carbon dioxide emissions by about 290 million tons over the life of the plant, and reduce reliance on natural gas by about 13% in the first full year of operation. Clearly, the Turkey Point 6 & 7 project represents an important opportunity to reduce greenhouse gas emissions and improve fuel diversity.”

FPL said its project cost estimate was not based on the costs for Vogtle Units 3 and 4 and Summer Units 2 and 3. FPL does, however, compare its project cost range to the costs experienced at those projects as a benchmark. The high end of FPL’s cost estimate range exceeds the reported costs of those other projects. FPL’s high end capital cost estimate is 16%, or about $1.7 billion, above the publicly reported Vogtle project cost.

The new units would each be a Westinghouse AP1000 pressurized water reactor, each with thermal power ratings of 3,415 MW(t). They would be located on the same site as the existing Turkey Point site, which has five other power units, including two nuclear reactors.

Said FPL parent NextEra Energy (NYSE: NEE) about this project in its Feb. 20 annual Form 10-K report: “FPL’s need petition for two additional nuclear units at its Turkey Point site was approved by the [Florida Public Service Commission] in 2008 and FPL is moving forward with activities necessary to obtain all permits, licenses and approvals necessary for construction and operation of the units. The two units are expected to add a total of approximately 2,200 MW of capacity. The timing of commercial operation will be subject to various regulatory approvals from the FPSC and other agencies which will be required throughout the licensing and development processes and the nuclear units are expected to be placed in-service in 2027 and 2028. The NRC has indicated that its consideration of the licenses for the two units will be complete by early 2017.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.