Progress Energy to build 2 reactors in Fla.

Progress Energy has signed a $7.65 billion contract to build two nuclear reactors in Florida, a development that keeps the Raleigh-based electric utility at the forefront of a push to build the nation's first new nuclear plants in more than two decades.

The contract with Westinghouse Electric and the Shaw Power Group, based in Charlotte, covers nuclear engineering, procurement and construction.

Progress' ongoing spending on nuclear plants in Florida and North Carolina, along with curtailed spending on power lines, will help the utility maintain its financial goals this year despite a recessionary slowdown in electricity sales. This month Progress raised residential rates by 25 percent in Florida, about $27.28 for a typical household bill, to recover nuclear, fuel and environmental costs.

Customers in the Carolinas don't pay for Progress operations in Florida, but the company will eventually recover the cost of its proposed nuclear expansion in this state from its customers here.

The contract announced Monday covers less than half the total cost of the nuclear project in Florida. Progress expects to pay at least $17 billion for all costs associated with the two reactors and new transmission lines. The contract does not include nuclear fuel, land acquisition, license application, regulatory review, financing and likely cost increases.

Recovering nuclear costs now rather than after the plants are built will save Florida customers about $13 billion on loan interest and other expenses, Progress said. Nuclear plants typically require about a decade of planning and construction. The Florida reactors are expected to start operating between 2016 and 2018.

The two Florida units, when completed, will employ at least 800 full-time workers. Each reactor in Florida will have a generating capacity of 1,100 megawatts, generating more power than the 900-megawatt Shearon Harris nuclear plant in Wake County.

Progress has not yet requested a rate increase in North Carolina or South Carolina for new reactors planned at the Shearon Harris site, where the company has been generating electricity with one reactor since 1987. The two additional reactors are expected to cost at least $9.3 billion if the company decides to build them.

The Florida contract with the Shaw Power Group will draw on the company's talent worldwide, said spokesman Alan Chapple. Shaw, which specializes in power plant maintenance and nuclear refueling outages, is also building four nuclear plants in China. Shaw Power Group is a Charlotte-based division of The Shaw Group, headquartered in Louisiana.

Recouping the nuclear expenses will help Progress meet its 2009 earnings target between $2.95 a share and $3.15 a share, which is in line with the company’s 2008 original earnings guidance, despite expected challenges this year during an economic slowdown.

The company will cut $250 million out of its capital budget for 2009, previously set at $2.86 billion for the Carolinas and Florida. Most of the savings will come from reduced work on transmission towers and distribution lines as the utility experiences a slowdown in customer growth.

Progress, with more than 10,000 employees in three states, has 3.1 million electricity customers in the Carolinas and Florida.

Its stock fell 43 cents Monday to close at $40.22. The shares dropped nearly 18 percent last year.