State Approves FPL Rate Change For Future Nuclear Facilities

TALLAHASSEE (CBSMiami/AP) – Despite objections from a number of consumer advocates, the state approved Florida Power & Light and Progress Energy Florida's requests for the amount they charge customers for future nuclear facilities in 2013.

The five-member Public Service Commission unanimously approved a decrease from the current rate paid by Florida Power & Light Co.'s customers but agreed to an increase for those served by Progress Energy Florida.

FPL sought $151 million, which will be $1.69 per month for a typical residential customer using 1,000 kilowatt hours. That's 51 cents less than this year's nuclear cost recovery charge.

Progress will get $143 million. That will increase the current charge for a 1,000-kilowatt hour customer by $1.93 to $4.79 per month.

Utilities normally cannot pass on such expenses until new or renovated plants go into operation, but state law makes an exception for nuclear facilities. The law is designed to encourage nuclear power despite high construction costs compared to other generating options.

Since the law went into effect, more than $1 billion in expenses for future nuclear facilities already have been passed on.

"This is an extremely unfortunate situation for utility customers in Florida who are being forced to pay this 'nuclear tax' up front for electricity that will very likely never be produced from proposed new reactors," said Stephen Smith, executive director of the Southern Alliance for Clean Energy.

The Knoxville, Tenn.-based group opposes the nuclear cost recovery law and has challenged it in the Florida Supreme Court. The justices heard oral arguments in October but have not yet ruled.

FPL officials dispute the group's criticism noting that reactor upgrades will be completed by the end of this year at the utility's St. Lucie plant and by spring at its Turkey Point plant. Both companies, though, also are passing on planning and other preliminary costs for building new reactors, which are subject to possible cancellation if they prove unfeasible. Those costs would "start growing fairly astronomically" if actual construction does begin, said Mark Laux, an analyst for the commission.
Commissioner Julie Imanuel Brown said she's sympathetic to the argument "that those who are paying today may not even be around to receive the cost benefits."

The utilities, though, contend nuclear power saves money for consumers in the long run because of low fuel expenses despite its high construction costs.

That equation, though, has been disrupted in the last few years due to a decline in natural gas prices. Commissioner Eduardo Balbis said if history is any indicator, it's unlikely gas prices will remain that low "so that does give me some comfort."

Public Counsel J.R. Kelly, the state's consumer advocate, objected only to portions of the utilities' requests. Kelly lost his argument that FPL shouldn't be allowed to combine the costs of upgrades to existing reactors at its St. Lucie and Turkey Point plants because of high cost overruns — $500 million in the past year alone — at the latter. Kelly contended they should be considered separately so the Turkey Point costs could be challenged.

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