Nuclear Socialism: FPL and Progress Energy Get $282 Million Rate Hike

2 p.m. Update: The News Service of Florida is reporting that the state Public Service Commission on Monday agreed to allow Florida Power & Light and Progress Energy Florida to collect about $282 million from customers next year to pay for nuclear-power projects. The PSC approved $196 million for FPL and $86 million for Progress. It reduced a Progress proposal to collect $141 million. Most of the FPL money will go toward upgrading nuclear plants in St. Lucie and Miami Dade counties. Most of the Progress money will go toward plans for building two nuclear reactors in Levy County.

Despite critics’ cries of “nuclear socialism,” the Florida Public Service Commission is expected to approve $337 million in utility rate hikes on Monday. The rate hikes will affect all electricity customers in Flagler County.

Florida Power & Light and Progress Energy are seeking “early cost recovery” increases to kick-start four proposed nuclear reactors on the east and west coasts. Under state law, utilities can seek rate hikes to cover planning, design and other preconstruction costs.

But opponents say customers may never benefit from the projects which, ultimately, may never be built.

“The state should not allow utilities to finance what will be a folly on the backs of ratepayers,” said Pinecrest Mayor Cindy Lerner.

Mark Cooper, senior fellow for economic analysis at the Institute for Energy and the Environment at Vermont Law School, estimates that ratepayers will shell out $3,000 in higher electric bills before plant construction could even begin.

“[Consumers] won’t break even until after 30 years, assuming there are no cost overruns or additional rate increases. This is nuclear socialism,” asserted Cooper, who has submitted expert testimony to the PSC on the cost recovery issue.

Because multibillion-dollar nuclear plants have been difficult, if not impossible, to finance on the open market, Florida’s two largest investor-owned utilities received legislative relief in the form of “early cost recovery” at the PSC.

It is widely expected that the commission will approve a preconstruction funding package of $196 million for FPL for two new plants at Turkey Point south of Miami and $141 million for Progress Energy’s proposed reactors in Levy County.

Both utilities say they intend to pursue licensing with the U.S. Nuclear Regulatory Commission. But neither company has formally declared an “intent to build” the plants.

Jamie Whitlock, legal counsel for the Southern Alliance for Clean Energy, said the utilities’ “option-creation” approach does not commit them to construction.

If the plants are not built, the companies nevertheless keep their “early cost recovery” rate increases and the shareholders retain the value, with interest, of any services and materials purchased with those funds.

South Miami Mayor Philip Stoddard called the arrangement “a funding scheme that is complete corporate welfare.”

South Miami, Pinecrest, Biscayne Park and the Miami-Dade League of Cities have passed resolutions opposing early cost recovery. But efforts to strike down the five-year-old law have failed. State Rep. Michelle Rehwinkel Vasilinda, D-Tallahassee, has reintroduced a repeal bill for the 2012 session.

While Stoddard argues that consumers are being charged for unproven designs that will double electric bills in the short run, the utilities maintain that nuclear reactors are, in the long haul, far more cost-efficient than plants burning fossil fuels.

“They deliver long-term benefits to customers. Every year Levy is on line, it will reduce fuel costs by $1 billion a year. It’s the only carbon-free program working 24/7,” said Progress spokesman Tim Leljedal.

A Progress spokeswoman said the utility is “hoping for” PSC approval on Monday.

“Our intention is to go through the licensing process with the NRC. Once that’s approved, we will review our options for moving forward,” the spokeswoman said.

Progress estimates the price tag on its Levy County complex at $17 billion to $22 billion.

Noting that PSC staff has recommended approval of the cost recovery proposals, FPL spokesman Michael Waldron said funding for upgrades to the utility’s existing plants “makes up about 90 percent of our request for 2012 nuclear cost recovery.”

“For the typical residential customer, the total cost will be about $2 per month in 2012. Even with these costs, FPL’s monthly bills will remain the lowest of all electric utilities in the state,” Waldron said.

–Kenric Ward, Sunshine State News

Contact Kenric Ward at [email protected] or at (772) 801-5341.