Possible North Escambia Gulf Power Nuclear Plant Faces Fight
November 11, 2011
In a move spurring a regulatory fight, Gulf Power Company is seeking to collect millions of dollars from customers for a possible nuclear-power project in North Escambia.
By 2012, Gulf Power expects to finish buying 4,000 acres of land near McDavid that could eventually be home to a nuclear plant or perhaps another type of power plant.
But with state regulators scheduled to hold a hearing next month about a Gulf Power request to raise base electric rates by $93.5 million, attorneys for consumers and business groups are trying to block part of the proposal dealing with the potential nuclear site.
State Public Counsel J.R. Kelly, whose office represents consumers in utility issues, said Gulf Power does not know how it will use the site and has not gone through a regulatory process aimed at determining whether the utility has a need for another power plant.
“Bottom line, from our standpoint, is it’s so speculative,” Kelly said Thursday.
But Gulf Power spokesman Jeff Rogers said the company knows it will eventually need the land. He said the company is keeping its “options open” until forecasts show a need for developing a power plant, which could be nuclear, gas-powered or some other type of facility.
“You can’t meet the need without the very first thing in place, and that’s the property, the land,” Rogers said.
The possibility of Gulf Power pursuing a North Escambia nuclear project has drawn little statewide attention since it first became public in a NorthEscambia.com story. That is unlike plans by Florida Power & Light and Progress Energy Florida to build nuclear reactors in Miami-Dade and Levy counties. FPL and Progress are far ahead in their plans, including passing along hundreds of millions of dollars in project-related costs to customers.
But rate-case documents indicate Gulf Power started considering a nuclear project in 2007, after former Gov. Charlie Crist issued executive orders designed to reduce greenhouse-gas emissions from power plants.
Also, in 2006, the Legislature approved a law that makes it easier for utilities to recoup money from customers as nuclear projects are being developed. Lawmakers hoped the law would encourage building more nuclear plants.
The rate-case documents say Gulf Power considered more than two dozen potential sites in Northwest Florida before settling in 2008 on what is known as the North Escambia site that is bordered roughly by Bratt Road, Cox Road, Byrneville Road and Highway 29. The site is along the Escambia River, which could provide a crucial water source for a power plant, and has been owned largely by timber companies.
Crist’s push to limit emissions from facilities such as coal-fired plants has stalled in the Legislature. Also, the state’s economic woes have slowed Gulf Power’s expected growth in customer demand for electricity.
Pointing to such changes, Gulf Power official Rhonda Alexander said in written testimony that the company decided to defer moving forward with trying to get a license and permits for a nuclear-power plant. But she said it still needed to buy the land.
“Gulf had learned from its extensive site investigation that there was only one acceptable nuclear plant site in Northwest Florida,” said Alexander, who served as nuclear development manager from 2008 to 2010. “If Gulf was going to preserve the nuclear option for its customers, the North Escambia site needed to be secured by Gulf. If Gulf lost the ability to use that site, it would be precluded from building nuclear in the future.”
Gulf estimates costs related to investigating, buying and financing the site at $27.7 million. It is asking the Public Service Commission to build those costs into the utility’s rate base, which would lead to recouping the money from customers over time.
The impact on customer bills would be relatively small, totaling about $3.1 million a year, according to the company. For a residential customer who uses 1,000 kilowatt hours of electricity a month — a common measurement — that would translate into an increase of 26 cents.
But the Office of Public Counsel and other parties involved in the case, such as the Florida Retail Federation and the Florida Industrial Power Users Group, say Gulf Power shouldn’t be allowed to recoup the money through base rates.
Consultant Helmuth Schultz, a witness for the Office of Public Counsel, filed written testimony describing the proposal as “speculative overreaching.” In part, he said Gulf Power has not shown a need for adding a nuclear plant.
“Gulf has presented no basis on which the commission could conclude that this site could ever be used cost-effectively to benefit Gulf ratepayers,” Schultz said.
Pictured top: One of the first pieces of property purchased by Gulf Power Company for a possible North Escambia nuclear power plant. NorthEscambia.com file photo, click to enlarge.