Duke gets S.C. approval for nuclear spending

South Carolina's Public Service Commission this week approved Duke Energy's decision to spend up to $120 million more on pre-construction costs of the Lee nuclear plant.

The $11 billion plant, Duke's first in a generation, would go up near Gaffney, S.C., southwest of Charlotte. The S.C. approval covers spending from January of this year through June 2012 to "keep the nuclear option available."

That language reflects the uncertainty surrounding the delayed nuclear renaissance, which has been battered by high costs, cautious investors and, more recently, the nuclear crisis in Japan. The Nuclear Regulatory Commission last month said it has delayed approval of the reactor design Duke plans to use, the Westinghouse AP1000, because of unresolved technical issues.

North Carolina's Utility Commission hasn't yet ruled on a similar request on pre-construction spending by Duke. Duke had initially sought an endorsement of its decision to spend up to $287 million on Lee through 2013, for a total of $455 million including previous spending. Duke agreed with consumer advocates to limit the amount of further spending to $120 million through mid-2012.

Duke, meanwhile, continues to seek partners to share the costs and risks of new plants. In February, Jacksonville, Fla.'s municipal electric utility took an option to buy up to 20 percent of Lee. Duke has also shown interest in buying a portion of the two-reactor expansion of the Summer plant near Columbia that is co-owned by Santee Cooper and Scana Corp.

After twice pushing back the startup date for Lee, Duke now says it will be in about 2021.

Duke in hearing on nuclear costs

Amid the aftershocks of the Fukushima-Daiichi crisis, Duke Energy is seeking the S.C. Public Service Commission's blessing today to spend more money on its next nuclear plant.

Duke took much of the drama out of the day by agreeing to whittle back the additional $229 million in additional pre-construction costs it first sought. That would have put the total spent on the Lee plant, which Duke hasn't yet decided to build, at $459 million through 2013.

Instead Duke agreed with consumer and environmental groups to limit spending to "only the absolute minimum amount of dollars necessary to keep the nuclear option available" -- $120 million from this January through June 2012. That would keep the $11 billion Lee on track to start up sometime between 2021 and 2023, a date that's been pushed back a couple of times.

Duke has agreed to similar terms with North Carolina's consumer advocates on a Lee spending proposal before the N.C. Utilities Commission. That commission hasn't yet ruled.

Approval by the states would give Duke reassurance that it can eventually recover Lee's costs from customers, although that would take separate OKs.

Duke also commits in the S.C. agreement to continuing to try to share the risks of building a new plant. It pledges to keep negotiating for an interest in the two reactors that Santee Cooper and SCANA are preparing to build in Jenkinsville, S.C.

Friends of the Earth nuclear activist Tom Clements, the only party to the case that didn't sign the agreement, was scheduled to question Duke CEO Jim Rogers and other executives today.

Rogers wavered on Indiana hire

The latest release of internal e-mails that fueled the Duke Energy ethics scandal in Indiana show some staff members, including CEO Jim Rogers, squirming over the hire of a former state regulator.

Messages published today by the Indianapolis Star show Rogers sensing it would be "a bad move" to hire Scott Storms, the former general counsel for the Indiana Utility Regulatory Commission. Duke had already hired another commission official, Mike Reed, to head its Indiana operation.

Rogers had good reason to engage his radar. Months before, Duke had asked the commission to approve $530 million in additional costs to build its $2.9 billion Edwardsport coal-fired power plant. Customers will likely pay most of the plant's costs.

For reasons the e-mails don't make clear, Duke hired Storms anyway last summer.

Within months, as Duke's relationship with the former regulators came to light, the fallout began. Indiana Gov. Mitch Daniels sacked David Lott Hardy, the commission's chairman, and Duke fired Storms and Reed. Jim Turner, who had led Duke's regulated businesses from Charlotte, resigned in December following publication of e-mails between him and Hardy.

The latest e-mails suggest that Hardy and Reed wanted Duke to hire Storms. They show Duke staff members initially ruling out Storms for the job of handling Indiana legal affairs, but worrying that Hardy would be offended.

"This could all blow up with Hardy being mad that we won't hire Scott," says a July 1 exchange between Duke lawyers. "I'm really not sure how to get out of this mess."

Three weeks later, Turner wrote Rogers that he had talked to David Pippen, Daniels' general counsel. Pippen supported Duke's hiring Storms, Turner said.

Rogers responded that "it bothers me but I don't know why ... feels like a bad move at this time ... coming on the heels of Mike ... "

By the next day, more e-mails say Rogers had signed off on the hire.

The e-mails are among evidence before the Indiana State Ethics Commission, which heard accusations that Storms violated state law by taking the Duke job while continuing to handle cases involving Duke. The commission is expected to decide the case Thursday, the Indianapolis Star said.

"We are letting our testimony before the commission serve as our statement on this issue," Duke Indiana spokeswoman Angeline Protogere said.

Duke, meanwhile, offered in March to cap the Edwardsport costs passed to customers to $2.7 billion. The commission will hold hearings in October. It has scheduled more hearings in November on allegations of mismanagement, fraud and concealment filed by opponents of the plant.