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Pass-Through Crock: How Progress Energy May Once Again Nuke Its Customers

| July 16, 2011

When the Crystal River plant was functioning.

State regulators will need years to sort out Progress Energy Florida’s repairs to an idled nuclear power plant — and to determine how much customers should have to pay.

Florida Public Service Commission member Eduardo Balbis met Thursday with attorneys for Progress, consumers and business groups to discuss how to handle a case that Balbis described as “very fluid, complex and unique.”

“This is a case like none you have ever seen,” said state Deputy Public Counsel Charles Rehwinkel, whose agency represents consumers in utility issues.

Progress announced last month that it plans to do a massive repair project at the Crystal River nuclear plant to replace concrete in a containment building’s walls.

But the PSC will have to grapple with complex engineering and financial issues that will play out over a number of years. It will have to determine whether Progress has acted in a “prudent” fashion and, bottom line, whether customers should get hit with higher costs because of the repairs.

Progress, the state’s second-largest electric utility, says it is looking out for customers. For example, it says repairing the nuclear plant would be a better long-term move than replacing it with a natural-gas plant, which would burn hundreds of millions of dollars worth of fuel each year.

“We’re trying to do what’s best for the customers,” Progress attorney Alexander Glenn told Balbis, who is overseeing preliminary issues in the case.

Progress is already charging customers for non-existent nuclear power. The Legislature several years ago approved a scheme by which Progress Energy and Florida Power & Light could charge customers for construction of nuclear power stations slated for the future–even construction that hasn’t yet been approved, let alone started. The controversial bill was written in part by utilities and the nuclear-power lobby, and rate increases subsequently approved by the PSC. Current progress Energy customers are paying an extra $5.53 per month on a 1,000-kWh bill to finance construction of a new nuclear power plant in Levy County and to expand the Crystal River plant. Both of those projects are on hold, yet customers continue to pay.

The Levy plant was originally scheduled to be functional by 2016 and cost $17 billion. The cost has soared to $22.5 billion and the plant will not be operational sooner than 2021–by optimistic assumptions. Yet customers continue to pay. In May, Progress Energy filed a request from the PSC to keep charging customers for the two non-existent plants “to recover $157.6 million in nuclear costs,” in Progress Energy’s words, though there is no such thing as “recovery” or recoverable costs at the moment. The $157.6 million would be in addition to anticipated filings for more money Progress will want to charge customers as it repairs Crystal River.

Progress’ repair decision came after a series of events that started in 2009 when the plant was damaged during a project to replace a steam generator. Workers needed to create an opening in the containment building to allow the generator to be replaced, but the project caused a separation in part of the building’s concrete.

This March, as the plant was being prepared to operate again, another concrete separation was found in a different part of the containment building. That led to the decision to do the massive repair project, which is expected to cost between $900 million and $1.3 billion and keep the plant shut down until 2014.

Progress has insurance coverage that it expects to pay almost all of the repair costs. But while the plant is shut down, the company also will have to spend about $1 billion on other sources of electricity — and only has about $490 million in insurance coverage for that.

That could lead to Progress seeking approval from the PSC to pass along the additional costs to customers. A Progress official said last month that such costs could total $500 million to $600 million.

The discussion Thursday centered on how the PSC should juggle the various issues in the case and the amount of time needed.

Balbis said one possibility would be to break the case into three phases, all looking at the “prudence” of Progress’ actions. One phase would look at the time leading up to the March discovery of the separation problem; another would look at Progress’ decision to repair the plant instead of shuttering it; and the third would look at the period until the plant is operating again.

The final phase might take until 2015, after the repairs are done. But even the other parts would be lengthy.

Rehwinkel said the case is complicated, in part, because it will involve heavy use of engineering experts to study the concrete used at the plant. Also, he and other attorneys said it remains unclear whether Progress’ insurance will cover costs.

“This will be an evolving saga with the company needing to make decisions as they go along,” said James Brew, an attorney for PCS Phosphate, which is a Progress customer.

Progress spokesman Tim Leljedal said the company is continuing to conduct engineering and construction analyses. Also, he said the company is in discussions about the insurance coverage.

–Jim Saunders, News Service of Florida, and FlaglerLive

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6 Responses for “Pass-Through Crock: How Progress Energy May Once Again Nuke Its Customers”

  1. palmcoaster says:

    Why is that these corporate giants, based on the fact that operate a monopoly (as I can only get my electricity connected via one company) and the only breaks that can be applied to their never ending demands for increases to us, is only thru the Public Utilities Commission, which efficacy is doubtful.
    Lets compare; in my small business I do not get to charge my customers more when my equipment breaks down or I have to go and lease another equipment while mine is being repaired…If I was to do that I would loose my customers. The month that expensive equipment repairs were needed my small business absorves the cost, eats it, and that period we made less money and we just have to way for better time to come and make up for the losses.
    Now we have these corporate giants that will not content themselves with less profit, as greed is alive and well, so then they lobby our Public Utilities Commission to allow them to increase our bills to cover the repairs and as well pay for future better ( for their profits) installations…that actually being nuclear plants are awfully expensive and expose us to a disaster of the magnitude that we have seeing lately. Meanwhile they accumulate discarded radioactive material that they are still scratching their heads about where or to whom quietly stick it to, as its radiation will be active for centuries. By now they keep them in cooling pools mostly on the plants surrounded by… “residential areas”.
    The closest nuke plant we have here is in Fort Pierce I think.
    Lately by shear fear some countries have already decided to face out all nuclear plants like Germany and even Japan after their last tsunami. They learned their tragic lessons before us.
    What about these corporate giants to be pressed to switch to solar, wind and ocean tides energy?
    If I win the lottery I will spend 60,000 to install solar for my whole house power, solar pool pump and heater and have enough to run back my power meter and sell some to FPL…if they want to buy it. If they would not want to buy it will take me about 38 years of FPL bills monthly savings, to recover my investment. Not practical at my age.
    Now if we all install solar in our homes, then Progress Energy-FPL will be out of their profitable net revenue of 855 millions at least per quarter, generated by their 3.1 million customers. Then their 11,000 employees will retrain their jobs to the solar industry. But no more scary nuclear plants around. Next you can wonder why these corporate giants are so greedy when their profits abound. Peculiarly their VIP’s compensations are not given….wonder why.

  2. Liana G says:

    Why are we still heading in the direction on nuclear power? The nuclear catastropher in Japan recently, have many countries with nuclear energy making decisions to not only stop building nuclear plants, but to do away with nuclear energy altogether. Why is the US still forging ahead? We should be looking at creating and jumpstarting green energy technology which will create jobs in addition to providing a safe and healthy environment.

    Can we, the taxpayers, initiate a class action lawsuit to get back the money we are being coerced into paying for a product we don’t want, never received, and not our responsibility to forcibly invest in?

  3. Wally says:

    Why is there a question if replacement power costs during repairs are prudent? If they repair the plant there are replacement power costs (electricity generated elsewhere at higher cost while repairs are being made) but if they shut the plant down permanently they still need to buy the replacement power. Power use does not go up and down with the decision on what to do with Crystal River 3 and the costs of replacement power do not change over the next couple years if they are repairing the plant or dismantling the plant.

  4. palmcoaster says:

    The answer is…solar, wind and ocean tides energy. Now is available in the market a type of solar tile for roofs that work as solar panels in each entire house roof. We all in the sun belt sure will benefit from that if could be more a bit affordable to all, specially in new construction that now is nil. Also solar pool pumps are available now that will save the cost of running a pool on FPL power. Anyone needing a new pool pump should thing that the tree times higher cost of a solar pool pump and its solar panel will pay itself with time over. Solar energy is not as efficient up North as the glum days are many more than the sunny one’s. My daughter has a solar water heater with only one panel on her roof in her southwest house and is very economical. Works on solar and if several cloudy days come around the electricity kicks in then. System was in the house when she bought it!
    Some info on solar pool pumps in Florida:\ There are more choices yet out there and anyone buying solar is eligible to receive up to 30% tax rebate, for doing so.

  5. palmcoaster says:

    Now my question is if a city like in this case buys its own power utility from where will generate the power that will sell to its customers? I know that In Pc water utility the source are our wells…but with power is different. Wonder…

  6. ivan says:

    Progress Energy is a jerk ran company and if they can figure a way to hose the tax payer, they will spend millions to get it.It might be a good idea to see who passes these unexisting charges before they get them they want more.How can Progress keep wanting money and spend it faster then they get it with no results.The number three plant has been idle for some time and true to form, Progress has money for the new Nukes and want a bunch for repair on this one. What has happened to their big profits? How much have they spent on CEO’s retirement and bonuses. Wont the gov’t learn on these blood sucking leeches or at least hamper their requests for what seems to be out of sight and unreal to cost.

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