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TECO Seeks A Nuclear Partner

August 1, 2008

By Russell Ray, Tampa Tribune, Fla.

Aug. 1–TAMPA — Tampa Electric Co. is shopping around for nuclear power, a source of carbon-free energy that will become increasingly valuable should regulators follow through with promises to limit carbon emissions.

The electric utility doesn’t have the expertise or the cash to build a nuclear reactor, but it is talking to energy companies with nuclear know-how about a partnership giving Tampa Electric partial ownership of a nuclear reactor or a share of the power, Tampa Electric President Chuck Black said Thursday.

“Nuclear represents the best option to be able to add large blocks of generating capacity in a carbon-constrained way,” he said.

Whatever the cost, it would be recovered from Tampa Electric customers. Under new state law, the cost could be recovered years before the plant is completed.

A partnership with St. Petersburg-based Progress Energy Florida, which won state approval two weeks ago to build two nuclear reactors in nearby Levy County, is plausible but not definite.

“I wouldn’t say that Progress is out in front of everybody else,” Black said. “We’ve talked to them, but we’ve also talked to some other folks.”

Black wouldn’t identify the other companies. Florida Power & Light, the state’s largest electric utility, plans to build two reactors near Miami.

But Black said the utility won’t enter a deal with any company until uncertainties surrounding the cost of construction, nuclear technology and environmental permitting are resolved.

“There are a lot of things that have to happen for nuclear to be successful,” he said.

Tampa Electric’s decision depends on whether construction costs climb for the estimated $17 billion Levy County project or the $24 billion Miami reactors.

Bill Newton, executive director of the Florida Consumer Action Network, said Tampa Electric should use its money to build or purchase more renewable power.

“Solar technology is one breakthrough away from being competitive with these other types of power,” Newton said.

But the state’s electric utility can’t rely on renewable power to meet growing demand because wind farms and solar power plants don’t produce enough electricity, Black said.

Tampa Electric produces 55 percent of its power from coal and 45 percent from natural gas. About 2.5 percent is from renewable energy sources.

Although gas plants burn cleaner than coal plants, both produce heavy emissions of carbon dioxide, something state and federal regulators plan to limit under pending legislation.

Nuclear power produces no greenhouse gases and would help Tampa Electric comply with new standards and avoid heavy penalties.

Under state law, utilities can begin recovering the cost of constructing a nuclear plant years before the first watt of power is generated. The law was passed to encourage investments in nuclear power.

If Tampa Electric strikes a deal that would give it ownership of a nuclear project, the utility could recover its investment from customers early, Black said.

“The only way we could do it is if we could apply the provision of that advanced cost recovery,” he said. “Absent that, we would not be able to do it.”

The problem is that customers could get stuck with a multibillion-dollar bill for a plant that may not be completed, Newton said. New nuclear plants may not be needed in Florida, where customer growth has slowed, he said.

At Tampa Electric, customer growth is expected to average less than 1 percent this year.

Reporter Russell Ray can be reached at (813) 259-7870 or rray@tampatrib.com.

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Copyright (c) 2008, Tampa Tribune, Fla.

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