Duke doubles cost estimate for nuclear plant
Tuesday, November 4, 2008
By John Downey Senior Staff Writer
Charlotte Business Journal
Duke Energy Carolinas has raised the expected construction costs of its proposed Lee Nuclear Station to $11 billion, excluding financing costs. That's roughly twice the company's original estimates.
Based on the financing costs for Duke's new coal-powered unit at Cliffside Steam Station, financing expenses would increase the nuclear plant's price to more than $14 billion.
The new estimate is included in a cover letter Duke has sent to the N.C. Utilities Commission with its 2008 Integrated Resource Plan. That annual plan outlines Duke's expectations for demand over a 20-year period and outlines how the utility expects to meet the demand.
The plan also upgrades the expected capacity of the Cliffside unit to 825 megawatts. As originally designed, it was rated at 800 megawatts. The plant is being built on the border of Cleveland and Rutherford counties.
Duke's plan also discloses that the troubled U.S. economy has prompted the company to delay the construction of its proposed Dan River and Buck combined-cycle natural gas plants.The construction of each plant will be delayed for a year because the weak economy may affect demand and because the current credit crunch makes financing unattractive.
The first phase of the Buck plant in Rowan County will now open in 2011, with construction of a second phase to start the following year. The Dan River facility in Rockingham County will open in the summer of 2012.
The cost estimates for Duke's proposed nuclear plant in Gaffney, S.C., have proved controversial. Three years ago, Duke gave an estimate of $4 billion to $6 billion for the two 1,117-megawatt reactors it proposed to build. Duke had not updated those figures until now. Opponents of the project have noted that nearly identical plants proposed in Florida will cost as much as $17.8 billion.
The Lee plant is slated for completion in 2018. But Duke's new estimates for the project are not adjusted for future inflation. Company spokeswoman Paige Sheehan says Duke did not attempt to calculate how much the final costs would be, with inflation factored in. She says there are too many uncertainties to calculate a firm number. The company chose to release its new estimate based on the current costs.
For several months, Duke has acknowledged the costs of the plant were increasing. The company disclosed updated estimates to regulators in the Carolinas in the spring. But they declined to release those figures to the public, saying such disclosure would cripple negotiations on construction contracts.
But company officials said throughout the summer that they hoped to be able to release ballpark estimates this fall. The company included its new cost estimate with its filing Monday with N.C. regulators.
Duke Energy Carolinas is a unit of Charlotte-based Duke Energy Corp. (NYSE:DUK).
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