Industry Outlook 2006 - Utilities
The Nuclear Option
A renewed call for energy independence spurs utilities to plan for nuclear plants.
ENERGY CHOICES: Higher natural gas prices and new tax incentives make nuclear plants more attractive.
After a dramatic increase in natural gas prices, encouragement from President Bush and new tax incentives, Florida's electric utilities are planning a new generation of nuclear power plants in Florida. "People recognize that there aren't a whole lot of other options," says Bill Habermeyer, president and CEO of St. Petersburg-based Progress Energy Florida.
Progress Energy, which already has one Florida nuclear power plant in Crystal River, has notified the U.S. Nuclear Regulatory Commission that it is preparing applications for two nuclear power plants, one in the Carolinas and one in Florida. "If you want energy independence, where are you going to go for fuel?" asks Habermeyer, adding that for now renewable energy sources can't provide the amount of power needed to meet the needs of a fast-growing state like Florida.
"I think we need to look at a diversified fuel mix," says John Hutchinson, general manager for public affairs at Gulf Power Co. in Pensacola. Gulf Power's Atlanta-based parent, Southern Co., operates three nuclear power plants, one in Alabama and two in Georgia, for its retail companies, Alabama Power and Georgia Power. Hutchinson says that Southern is continuing to look at nuclear across its system. "We wouldn't need one just for Gulf Power," he says.
For the short term, natural gas and coal will continue to power Florida's new and expanded utility plants. The U.S. Department of Energy selected OUC, Orlando's municipally owned utility, and Southern Co. for one of four projects nationwide funded through its Clean Coal Initiative. The 285-megawatt OUC/Southern plant will get under way in 2007 and cost $557 million, $235 million of which will come from federal Energy Department funds.
If Progress Energy decides to go ahead with new nuclear plants and gets the necessary approvals, construction could begin by 2010.