Duke raises cost estimate for Lee plant

07 November 2008

Duke Energy has raised the estimated cost of constructing the proposed William States Lee III nuclear power plant in Cherokee County, South Carolina, to $11 billion, around twice its original estimate.

In a covering letter that Duke sent to the North Carolina Utilities Commission (NCUC) with its 2008 Integrated Resource Plan (IRP), the company said that it now expects the plant to cost some $11 billion to construct, excluding financing costs and inflation. In 2005, the company put the cost of constructing the Lee plant at between $4 and $6 billion. This is the first time the company has revised this figure.

Duke told the NCUC that is "has not finalized an engineering, procurement and construction contract for the Lee Nuclear Station, and this estimate could be impacted by many factors currently affecting the global energy supply markets."

The company said, "The IRP nuclear analysis focuses on the impact of various uncertainties, such as nuclear capital costs, the impact of greenhouse gas legislation, and the availability of options such as federal loan guarantees that can help reduce the costs customers would pay for this greenhouse gas-emission free baseload resource."

It added, "The IRP analysis included sensitivities on each of these uncertainties. With regard to nuclear capital costs, three costs were modelled. These costs, identified as a low, mid, and high range of costs, are based on the latest information available for cost of the proposed Lee Nuclear Station."

Duke had previously announced plans to add some 3300-4100 MWe of generating capacity by 2016, an increase of at least 15% over its current capacity. In addition to the Lee nuclear power plant, Duke also plans to construct two gas-fired plants in North Carolina. It is also planning to build a new coal-fired unit at its existing coal-fired Cliffside plant in North Carolina. However, in its IRP, the company says that the economic downturn in the USA has prompted it to delay the construction of its proposed gas-fired plants by one year. In addition, it has decided to raise the capacity of the Cliffside plant from the originally planned 800 MWe to 825 MWe.

In June, Duke reported that it incurred pre-construction costs of some $70 million up to the end of 2007 and that it estimates that it will incur up to an additional $160 million in costs between the beginning of 2008 and the end of 2009.

Duke submitted a combined construction and operation licence (COL) application with the US Nuclear Regulatory Commission (NRC) for the proposed Lee plant at the end of 2007. The COL application is based on two Westinghouse AP1000 pressurized water reactors with a combined capacity of 2234 MWe. Duke expects to receive a COL for Lee in early 2012. The Lee plant would come on line about 2016-18 if the company proceeds.