Business

Groups don't want utilities to raise rates to build nuclear plants

Posted February 1, 2011 6:17 p.m. EST
Updated February 1, 2011 6:58 p.m. EST

— Several organizations fired a pre-emptive strike Tuesday against plans by two North Carolina utilities to streamline the process for seeking rate increases to pay for new nuclear plants.

The groups bought a full-page advertisement in The News & Observer newspaper and even wrote a column urging people to lobby against any legislation that would allow Progress Energy and Duke Energy to charge customers upfront for some of the costs associated with building new plants.

"We don't think the streamlined approach is the way to go," said Bill Wilson, associate state director for advocacy at AARP of North Carolina, one of the groups behind the ad. "Rates would go up for people, so that's a problem. The second thing is that we really believe in public scrutiny."

Progress Energy and Duke Energy are in the process of merging into the nation's largest electric utility. The combined company plans to build four more nuclear generators, including two at the Shearon Harris site in southwest Wake County, at a cost of about $10 billion each.

"Nuclear has to be part of the equation (to meet growing demand)," Progress Energy spokesman Mike Hughes said. "Nuclear is a very expensive option to build. Nuclear is also our least-cost option to operate."

Hughes said the majority of the construction costs would be charged to customers after the nuclear plants are in service, but the utilities want a way to raise rates before the plants come on line to recover costs for site selection and preparation, financing and operations and maintenance.

Progress Energy already has spent tens of millions of dollars, for example, on pre-construction studies and applications for the two Shearon Harris generators. The units are still awaiting regulatory approval and might not be built for another three years.

A streamlined rate plan would allow the North Carolina Utilities Commission to review each rate increase tied to those costs but would avoid a full-blown public hearing every year, he said, noting such hearings are costly and time-consuming.

"We're going to do everything we can to minimize the impact on customers," he said.

Although no bill has been introduced in the House or Senate, Wilson said the AARP and other groups don't like the potential risk to utility customers.

"We would like to see the process maintained as it is, where we know we have significant input from the public," he said.