The nuclear crisis in Japan has spooked N.C. lawmakers from voting this year on a legislation that would make it easier for Duke Energy and Progress Energy to raise rates to pay for new nuclear reactors.
That means the earliest the N.C. General Assembly could vote on the legal change sought by electric utilities would be during next year's legislative session, said Duke Energy CEO Jim Rogers during a conference call with analysts this morning.
Mike Hager, vice chairman of the House Public Utilities Committee, said the nuclear proposal had enough support to pass until a tsunami disabled Japanese reactors in March.
Hager, a mechanical engineer who worked 16 years for Duke, said state officials should hold off on the nuclear proposal until the root causes of the Japanese crisis are analyzed.
He also said he has misgivings about advancing legislation that could add between $20 and $40 to a monthly household power bill at a time that many North Carolina counties are still racked by double-digit unemployment rates.
"It many not be a lot to me and you but it makes a world of difference for those folks," said Hager, a Republican who represents economically distressed Cleveland and Rutherford counties. "It was going to be a bill that we would have to explain -- why it was important for the energy future of North Carolina."
Duke and Progress have said they need to be able to pass on nuclear costs to customers without full rate hearings. They want a streamlined regulatory proceeding that examines nuclear expenses only, but doesn't require an audit of the full gamut of company operations.
Such streamlined cost recovery would take several weeks to process, as opposed to the several months that would be needed for full rate hearings. State lawmakers support the change, Rogers said, but they felt the timing was bad so soon after the March tsunami that disabled multiple reactors in Japan.
"The events in Japan have affected concerns of the appropriate timing of the legislation," Rogers told analysts.
Nuclear critics have said such a law would shift the risk of building nuclear plants from shareholders to customers, raising monthly bills years before the customers saw any benefit from the rate increases.
But the nuclear industry says the change would allow power companies to recover their financing costs early and make interest payments on an annual basis, shaving hundreds of millions of dollars from the total cost of a nuclear project and reducing the overall impact of the rate increases necessary to pay for new reactors.
Duke expects to receive a federal license for a pair of new reactors in South Carolina in 2013, giving state lawmakers sufficient time to take up the issue next year, he said. Each of those reactors is estimated to cost about $11 billion. The reason N.C. lawmakers would vote on legislation to pay for a nuclear plant in South Carolina is because that plant would generate elecricity for Duke's customers in both states.
In the wake of the Japanese crisis, one of the lingering question marks is how the tsunami will affect the total cost of a nuclear plant in the United States.
The U.S. Nuclear Regulatory Commission has said it will review the Japanese incident in order to determine what safety upgrades might be needed at American nuclear facilities. Changes in federal safety rules would likely increase the cost of operating a nuclear plant.
One likely issue of concern is the amount of radioactive nuclear waste stored at spent fuel pools. As the superheated waste becomes concentrated, the likelihood of a fire and radioactive leak becomes greater in the event of an accident that causes a drop in water levels in the pools.