Who to thank for higher electric rates to cover advance nuke costs? Start with these two
Wake up and good morning. Now that Florida regulators blessed Progress Energy's requests for higher electricity rates to cover advance costs for building a nuclear power plant in Levy County, here's a reminder how this strange financial arrangement came to pass. We must wander back at least three years, to 2006 and the state legislature, and to these two representatives of the people.
Remember, Florida is one of a few states whose lawmakers authorized power companies to charge customers in advance to pay for new, expensive power plants. Critics complain state lawmakers merely dumped the expensive burden of financing high-cost plants on to utility customers, and off the power company that normally would borrow money to build a new plant. Shareholders who typically take on such risks as investors in the company are now spared some of that exposure.
Based on the Florida Public Service Commission's ruling Friday (a 3-1 vote) Progress Energy Florida can charge residential customers $5.86 a month — an increase of about $1.55 — per 1,000 kilowatt hours to go toward the up-front costs of its planned Levy County nuke plant. The increase starts Jan. 1. Residential customers now pay $127.31 for 1,000 kilowatt hours. More details here.
How did we get to this point? We can start with 2006 legislation introduced in the House by state Rep. Frank Attkisson, R-Kissimmee (upper left photo), and in the Senate by state Sen. Carey Baker, R-Eustis (upper right photo). The proposed legislation was designed to let Progress Energy (and Florida Power & Light, also seeking a new nuke plant in Florida) to pass through to customers licensing fees and other preconstruction costs earlier than is possible now.
Here's how PSC chairman Matthew M. Carter II justified Friday's regulatory vote approving higher rates to cover upfront costs:
"Nuclear power provides fuel diversity and will save Florida residents money on future utility bills."
In truth, what Carter (who's scheduled to leave the PSC shortly) should have said is some Florida residents may save some money on future bills. But anticipating the energy costs that far into the future is little more than guesswork -- especialy given the massive leaps already in projected costs for the nuke plant projects in Florida.
As reported in 2006 by the St. Petersburg Times, the legislation reflects Progress' desire to reduce some of the risk and cost associated with building a nuclear plant. Said Progress spokesman C.J. Drake at the time:
"This is a multibillion-dollar investment we are planning to make in Florida. It's not a natural gas plant. It's not a coal plant. Something like this hasn't been attempted in a generation."
Which, no doubt, is grounds for making customers pay for it? Hats off to the lobbyists who convinced these state lawmakers to rally around this wacky idea. Given Florida's demographics, what percentage of the current customer base of Progress Energy will still be living when the Levy County nuke plant actually begins operating some time after 2017 (and that's not counting any more delays)?
-- Robert Trigaux, Times Business Columnist