Duke proposes to pull plug on Lee nuclear project, raise rates to cover coal ash cleanup
- Duke Energy last week asked North Carolina regulators for authorization to scrap its Lee Nuclear project, citing the demise of nuclear firm Westinghouse Electric.
- The utility made the announcment in its request seek higher rates from the North Carolina Utilities Commission to pay for a wide-ranging slate of investments that include coal ash cleanup, grid modernization, renewables and natural gas generation.
- The utility wants to increase revenues by almost $650 million, or about 13.6% across all customer groups.
Duke included a lot of news in its rate proposal last week, but the biggest takeaways are the size of coal ash expenses and the cancellation of the Lee Nuclear project.
The Charlotte Observer reports coal ash accounts for more than half of the double-digit rate increase proposed by the utility. Estimates to clean up 32 coal ash storage sites could reach $2.5 billion over the next four years.
According to the utility, Duke Energy Carolinas "is responsibly managing coal ash and safely closing ash basins at its coal sites in the Carolinas." The utility recycles about 75% of the ash. Costs related to cleanup include higher expenses since 2015 for compliance with new federal and state regulations and the closure of ash basins at seven sites.
Costs for the cleanup will undoubtedly be a major factor in the rate case, with consumer advocates arguing customers should not be on the hook. In a related note, it appears the utility is possibly facing a class action lawsuit seeking to block Duke from offering $5,000 to households near coal ash sites to forego future litigation.
As for the Lee Nuclear project, Duke says it is seeking NCUC approval to cancel the development "due to the recent bankruptcy of Westinghouse Electric ... and other market activity."
"Most notably, risks and uncertainties to initiating construction on the Lee Nuclear project have become too great and cancellation of the project is the best option for customers," the utility said in a stateent. However, Duke intends to maintain the license to build new nuclear at this site in the future "if it is in the best interest of customers."
Duke proposed the 2,234 MW Lee Nuclear Station in 2007. Planned for Cherokee County, S.C., the plant would have used a pair of Westinghouse AP1000 reactors. But the company's design caused delays, cost overruns and eventual cancellations at two other nuclear projects: South Carolina's VC Summer units and Southern Co.'s Vogtle Project. In fact, utilities Santee Cooper and SCANA abandoned the VC Summer units after estimating costs to continue were too high.
The utility will seek to recover some of the nuclear licensing and initial development costs at the site.
Residential customers would see an average rate increase of 16.7%, while commercial and industrial customers would see an average increase of just under 11%. Duke says that if the proposal is approved as-is, an average customer using 1,000 kWh per month would pay about $122.68 per month, an increase of $18.72 .
- The Roanoke Times Lawsuit: Stop Duke Energy bid to waive coal ash legal claims
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