Levy nuclear plant more costly than a natural gas facility electricity through wood

Lisa Edgar is a believer. As a member of the Public Service Commission, she is one of five votes that green-light new nuclear plants, including Duke Energy’s Levy County project. The law that favors nuclear plants, Edgar said last month, could save Florida consumers "millions and millions, and maybe even billions" of dollars.

State officials repeat the nuclear-saves-money gospel so often, the Tampa Bay Times set out to see if the premise is true. The analysis compared the cost of the Levy nuclear plant to a natural gas facility, using a set of assumptions that, if anything, favors nuclear.

The proposed Levy plant can’t compete against natural gas on the first two. Nuclear plants are much more expensive to build and to operate and maintain. And the Times found the lower cost of fueling a nuclear plant doesn’t come close to making up the difference.

In its analysis, the Times used estimates and assumptions Duke Energy filed with the Public Service Commission last year, including a projected 60-year lifespan for the Levy plant. The analysis included the cost of replacing the gas plant after 30 years, since it would last only about half as long as a nuclear plant.

Nuclear plants produce no carbon emissions, while natural gas plants do. Right now there is little political will in the United States to tax carbon emissions or force utilities to build natural gas plants that capture carbon. But even accounting for those types of financial penalties, a natural gas facility would be less expensive in the long run than the Levy nuclear project.

The Times gave Duke Energy, which bought Progress Energy last year, a written rundown of the data and assumptions used in its analysis. The utility did not dispute the findings. In fact, it also found nuclear to be significantly more expensive than a natural gas facility. That finding is buried in written testimony from a Duke executive, among tens of thousands of documents filed with state regulators.

(The sharp-eyed reader will wonder why the Times analysis finds a total 60-year cost for the Levy plant that is much lower than the oft-cited $24.7 billion figure just to build it. This has to do with how a dollar today is not worth the same as a dollar 60 years from now, and a lot of dense accounting including inflation, depreciation and discounting. An explanation of how the analysis was done accompanies this story.)

Duke spokesman Sterling Ivey wrote in a statement that natural gas prices will likely remain volatile and an over-reliance on "any one fuel is unlikely to be a good strategy for producing stable electricity prices or supply over the long term."

"New nuclear generation can provide a valuable long term option against the price volatility of natural gas," Ivey wrote, "and should be a component of Florida’s balanced energy portfolio in order to reliably secure Florida’s energy future.”

And there’s Edgar, the PSC commissioner, who told a Senate committee last month that the state law that supports the construction of nuclear plants including Levy would save customers millions and maybe billions of dollars “over the course of the project.”

Any nuclear plant must hold up to hurricanes and earthquakes, human error and terrorist attacks. It takes expensive technology, tricky engineering, tons of steel and concrete, and inspections and then more inspections. The specters of Three-Mile Island, Chernobyl and the more-recent Fukushima meltdown hang over the entire process.

For Levy, the construction price tag is even higher. Duke Energy is too far behind to bring the plant online sometime in 2016, as it had hoped. So financing charges keep accruing and some reactor components will likely never get used. Regulators also have deferred some costs for years, not wanting to hit customers with too many charges all at once. The delays cause the totals to grow.

Put another way, construction combined with Duke Energy‘s profit, taxes and bond payments for Levy made up more than two-thirds of the plant’s total costs over its 60-year lifespan, according to the Times analysis. The same expenses for the equivalent natural gas facility totaled 13.5 percent.

The reason: the workforce. A nuclear plant is more complicated, more specialized, and the consequences of something going wrong are more dire. There are backups to the backups to the backups to the backups. Levy would require about 600 workers to operate — engineers to keep it running, specialists to handle the waste, security to keep it safe.

Another example of the belief that Levy is cheaper: State Public Service Commissioner Eduardo Balbis argued last year that natural gas prices would have to remain below $5 per thousand cubic feet over the next 30 years for a natural gas facility to prove more beneficial than building the Levy County plant.

Based on projections from Duke Energy and the federal government, the Times’ natural gas figures start at a low of $5.63 and through inflation reach a high of $32.10. That’s eight times what they are today and far above even the historic highs.

In addition, a state law passed in 2006 allows Duke Energy to collect a large chunk of its profit in advance of the nuclear plant coming online, a benefit not offered for building natural gas facilities. Duke already has made $150 million on Levy but has yet to commit to building it.

Including nuclear in an "all of the above" strategy "has become kind of a last refuge of scoundrels," Bradford said. "If we’re talking about world hunger we don’t talk about an all of the above strategy. We don’t say, ‘Lets fight world hunger with caviar.’ "