Court To Decide Legality of Those Utility Bills For Nukes Plants That May Never Be Built

A federal appeals court is poised to hear arguments in a class-action lawsuit challenging the constitutionality of a state law that has led to Florida Power & Light and Duke Energy Florida collecting money from customers for nuclear-power projects.

The 11th U.S. Circuit Court of Appeals is scheduled Aug. 22 to take up the case, which stems from a long-controversial 2006 law designed to help encourage the development of nuclear power in Florida. A federal district judge last year dismissed the case, prompting the plaintiffs to go to the Atlanta-based appeals court.

In a brief filed in March, the plaintiffs’ attorneys argued the state law improperly conflicts with a federal atomic-energy law and violates the U.S. Constitution’s Commerce Clause. The case seeks to recoup $2 billion that the plaintiffs’ attorneys contend has been paid by customers under an unconstitutional state law.

The 2006 law has been controversial, in part, because it has allowed the utilities to collect money for nuclear projects that might never be built. FPL used a portion of the money it has collected to upgrade already-existing nuclear plants. But, for example, Duke in 2013 shelved plans to build two reactors in Levy County after billing customers for early stages of the project.

The plaintiffs’ attorneys argue in the brief that the 2006 state law is “preempted” by a 1954 federal law known as the Atomic Energy Act. The brief contends that Congress did not intend for states to have a role in developing and promoting nuclear projects.

“Congress encouraged the development of commercial nuclear power, but required that development be balanced against national security and radiological health and safety concerns. … States cannot properly balance development, national security and radiological health and safety, because they are preempted from considering national security, health and safety issues,” the brief said. “Those are uniquely national concerns. Congress also explicitly gave the federal government exclusive regulatory authority under the (Atomic Energy Act). It is evident that Congress never intended any role for states in the development of commercial nuclear power.”

But the utilities, in briefs filed in April, disputed such arguments. Duke’s attorneys, for instance, argued that the state law is about rate-making and that the Atomic Energy Act allowed the states to have authority about whether plants are built and issues dealing with economic feasibility.

“The (state law) has nothing to do with any of the particulars of plant construction or operation, much less the aspects of construction or operation related to radiological safety,” the Duke brief said. “The statute does not regulate the safety of nuclear materials in any way. In fact, the (state law) expressly contemplates that utilities using its cost-recovery mechanism will obtain the necessary licenses from the (Nuclear Regulatory Commission) — the federal agency charged with regulating nuclear safety. Thus, contrary to plaintiffs’ theory, the (state law) falls squarely within the field Congress left to the states in the Atomic Energy Act.”

The Commerce Clause issue, meanwhile, includes allegations that the 2006 law prevents competition from out-of-state wholesale electricity providers.

The utilities, however, argue that the dismissal of the lawsuit should be upheld for several reasons, including that, as private companies, they are not the proper defendants in a case challenging the constitutionality of a state law. The state is not a defendant.

“The district court rightly determined that plaintiffs cannot state a constitutional claim … against Duke Energy because Duke Energy is a private company, not a state actor,” Duke’s brief said. “To be sure, plaintiffs complain about state action in their complaint; that is the nature of facial constitutional challenges. But Duke Energy did not (because it could not) undertake any of those actions.”

But the plaintiffs contend that only the utilities, not the state, can pay back the money to consumers.

“This case seeks restitution for $2 billion in costs that the Florida (Public Service Commission) authorized and the utilities collected in their customers’ retail electric bills to fund nuclear projects that mostly never came to fruition and to prevent future nuclear cost collection,” the plaintiffs’ brief said. “The utilities are the appropriate defendant because only they can grant the relief the ratepayers seek. It was the utilities, not the state of Florida, that collected the $2 billion, and it is the utilities that retain it. The state of Florida lacks the power to grant the relief plaintiffs seek.”

The lawsuit, which includes one Duke customer and one FPL customer as named plaintiffs, is part of years of legal and legislative wrangling about the 2006 law. The Florida Supreme Court in 2013 rejected a challenge that was based on alleged violations of the Florida Constitution.

–Jim Saunders, News Service of Florida