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St. Petersburg FL (SPX) Sep 05, 2008 Rising fuel prices, environmental improvements and planning for additional carbon-free nuclear power to meet future growth will increase the cost of electricity next year, Progress Energy Florida has announced. If state regulators approve the company's 2009 fuel-cost projections, clean-air expenses, nuclear pre-construction costs and other factors, the residential monthly bill for 1,000 kilowatt-hours (kWh) would increase $34.27 (31 percent) over current charges of $110.59 to $144.86 starting in January. $21.12 of the increase is for projected fuel costs in 2009 (including under-recovered amounts from this year); $11.42 is for new nuclear-plant construction; and $2.50 is for environmental projects, including the installation of the latest clean-air technology at the company's coal-fired power plants. "There is never a good time to raise the price customers pay for electricity, and we know it is especially difficult when many are struggling to make ends meet during this economic slowdown," said Jeff Lyash, president and CEO of Progress Energy Florida. "Our balanced approach to meeting future energy needs includes actively managing our fuel costs and ensuring that our operations and facilities are as efficient and economical as possible. Our fuel-hedging program has saved customers approximately $600 million in fuel costs since 2003. Our long-term strategy to invest in carbon-free nuclear power will increase our fuel diversity, decrease our dependence on fossil fuels and help avoid fuel-cost increases like this in the future. When our new nuclear reactors are in service, they will generate an estimated savings of more than $1 billion annually for our customers." Estimated cost increases for the company's two proposed nuclear reactors in Levy County, Fla. are largely due to payment for critical equipment necessary for their construction. Progress Energy Florida took the initiative to secure in advance several pieces of high-demand equipment needed to build the reactors. Securing and paying for these items now ensure they will be available when needed during the construction process and will ultimately lower the total cost of the project for customers. The $17-billion overall cost of the Levy nuclear project, including $3 billion for related transmission facilities, has not changed since it was announced earlier this year. Negotiations continue between Progress Energy Florida and other utilities for joint ownership of the reactors, which would also decrease costs for customers. If joint-ownership agreements are reached, the company will update its cost estimates. "We know that effectively managing electricity usage is important to the homes and businesses we serve and we offer our customers numerous innovative programs to help them save energy and money," said Lyash. "In the last 25 years, we have implemented energy-efficiency programs resulting in more than $909 million in savings to our customers. Participation in these programs is expected to increase 18 percent by the end of 2008." The company has also increased its support of the Energy Neighbor Fund to provide assistance to customers who are struggling to pay their electric bills. Employees and customers have given generously to this fund for years to help neighbors in need. Progress Energy doubled its corporate contribution to $1 million in 2008. The company has filed its 2009 projections for fuel and other expenses with the Florida Public Service Commission (PSC). The PSC has scheduled hearings in September to review nuclear costs and separate hearings in November to review the company's projected fuel, environmental and energy-efficiency expenses. Costs proposed for recovery next year are further described below.
Fuel costs In the past five years, the price of coal has increased 268 percent, largely driven by demand in China and India. Natural-gas prices have risen 49 percent and oil has increased 259 percent. These projections for 2009, added to under-recovered fuel costs this year, bring the total proposed recovery of fuel expenses in 2009 to about $3 billion. Recovery of this amount would add $21.12 to next year's monthly residential bill for 1,000 kWh. Progress Energy Florida does not earn a profit on these costs.
Nuclear costs After the reactors begin commercial operation, the savings to Florida customers through reduced reliance on fossil fuels is estimated at more than $1 billion annually. In addition, nuclear power does not generate any greenhouse-gas emissions, so completing the Levy project would avoid expenses from potential future carbon regulation. The company is also increasing the generation of its Crystal River, Fla. nuclear plant from 900 megawatts (MW) to 1,080 MW. The estimated savings to customers gained through the corresponding reduction in fossil-fuel costs is estimated at $2.6 billion over the life of this project. In 2006, the governor and Florida Legislature took a positive and progressive step in enacting a policy to promote future nuclear expansion and lessen the state's dependence on fossil fuels. Florida law allows recovery of certain pre-construction costs for nuclear facilities before they enter service, ensuring that utilities have access to the capital necessary to build the plants. By paying these costs as they are incurred, overall expenses will be much lower than if they could be recovered only after the facilities begin service. The estimated total cost of the Levy County nuclear project through completion is $17 billion. Advanced-cost recovery for this project in 2009 amounts to $394.6 million, which would add $11.42 to next year's proposed residential bill for 1,000 kWh. The requested cost recovery of the Crystal River nuclear project in 2009 is $24.9 million, which would add 72 cents to next year's proposed bill.
Other costs Environmental-Cost Recovery to pay for environmental programs and projects. The installation of clean-air technology at Progress Energy Florida's Crystal River coal-fired plants is expected to cost $1.2 billion through completion in 2010. The improvements at Crystal River will result in a 90 percent reduction in sulfur dioxide (SO2) and nitrogen oxides (NOx) emissions and an 80 percent decrease in mercury. Requested recovery of costs for these projects, along with other environmental expenses, is projected to increase $93 million and would add $2.50 over current charges to next year's proposed residential bill for 1,000 kWh. Capacity-Cost Recovery to pay a portion of the cost of purchasing power from off-system providers. The company is projecting a decrease of $2.35 from current charges on next year's residential bill for 1,000 kWh.
Helping Customers Save To assist low-income customers in managing their energy usage, the company launched the Neighborhood Energy Saver program in 2006. Through this program, Progress Energy Florida has installed approximately 50,000 energy-efficiency improvements in nearly 3,000 homes in seven communities. Before the end of 2008, the program will be implemented in three additional communities. Progress Energy Florida offers a variety of energy-efficiency tips to help customers save money on their bills: + Set the air-conditioning thermostat at the highest comfortable setting in summer and lowest comfortable setting in winter. + Inspect air-conditioning system filters monthly and clean or replace them as needed. + Reduce the temperature setting on the electric-water heater to 120 degrees. + Use ceiling and portable fans to keep air circulating, but turn them off in unoccupied rooms. + Close blinds, drapes and shades during the hottest part of the day. This keeps the sun's rays from heating your house. Other programs designed to assist customers include: Home Energy Check. Progress Energy Florida offers a free service that surveys household energy efficiency. Customers can complete a Home Energy Check online, or by mail, phone or through a visit by a company representative. Budget Billing. Customers on fixed incomes or others who need a consistent bill are encouraged to take advantage of Budget Billing. The program is free and helps customers forecast monthly energy costs and better plan their finances. Customers pay an average amount that is approximately the same each month. The difference between the budget billing amount and the actual amount also appears on the bill. Energy Neighbor Fund. Customers who need assistance paying their electric bills can seek help through the Energy Neighbor Fund. All funds collected from participating customers and employees are distributed locally through social service agencies to neighbors in need. Related Links Progress Energy Florida Home Energy Check
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