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Consumer advocate says nuclear plant fiasco means financial 'armageddon'

TALLAHASSEE — A warning to Progress Energy Florida customers about the financial impact of losing the Crystal River nuclear plant: Brace yourselves for "armageddon."

Maybe not today. Maybe not tomorrow, but soon, says Charles Rehwinkel, deputy state public counsel, who represents consumers before the Public Service Commission.

To date, customers have been spared the impact of Progress Energy Florida's disastrous nuclear energy track record, which includes: breaking the Crystal River plant beyond repair; recovery of costs related to the plant's assets; hundreds of millions in replacement power; planning a new natural gas plant to replace Crystal River; and spending $1.5 billion on the proposed but indefinitely delayed nuclear complex in Levy County.

In fact, a settlement last year between Progress Energy Florida and state regulators has temporarily lowered monthly power bills and put off the financial reckoning until 2017.

But after that, watch out, said Rehwinkel. "There's an armageddon coming in 2017, 2018. This is very scary."

Here's what he's talking about:

Progress Energy Florida, which became part of Duke Energy last year, already wants its 1.6 million customers to fork over $1.6 billion for costs related to Crystal River, another $1.5 billion for the replacement gas plant and another $1.5 billion toward the Levy plant, even if it is never built.

On Tuesday, representatives of Progress Energy Florida, PSC staff members and consumer advocates began laying the groundwork for the hearings on who will ultimately pay for all that.

The PSC currently is scheduling hearings for June, but Rehwinkel and other consumer advocates said that the complexity of the case will likely require the hearings to be put off until next year.

"The closing of this (Crystal River) plant is the biggest disaster in Florida power history," said James Brew, a lawyer who represents the phosphate industry, a large commercial power user. "We need to do it right."

Consumer advocates think that, when it comes to Crystal River, Progress Energy Florida has done little right.

They contend, for instance, that the utility settled for too small a payout from its insurance company.

The insurer, the Nuclear Electric Insurance Limited, paid a total of $835 million for property damages to the plant and to cover replacement power. The policy allowed up to $2.25 billion for property damages and $490 million per covered incident.

A higher payout by the insurer would have lessened the impact on customers.

Who pays for the outstanding — and in some cases still growing — bills related to Crystal River remains the subject of future state regulatory hearings.

Rehwinkel said the public counsel's office has asked to see the agreement between Duke Energy and the insurance company to see whether it might be possible to renegotiate the terms or whether consumer advocates simply will have to press state regulators to require the utility to get money from its shareholders.

Rehwinkel said the potentially overwhelming impact on customer bills from the Crystal River-related costs requires a careful review.

"There's just a lot of work that needs to be done," Rehwinkel said. He offered no details on how much future power bills would rise. Duke customers already pay the highest rates among Florida's three largest investor-owned utilities — Florida Power & Light and TECO (parent of Tampa Electric) being the other two.

In addition, the consumer advocates question whether the utility has made the right decisions in handling repairs and even the decision in February to shutter the broken nuclear plant.

But John Burnett, a lawyer with Progress Energy Florida, argued during Tuesday's meeting that the issues raised by consumer advocates were settled in an agreement reached with the state a year ago. That agreement prohibits the utility from requesting any dollars not already approved for Crystal River until 2017.

Burnett said commissioners should deem the consumer advocates arguments irrelevant because of a "lack of standing." He said the costs incurred have been supported by past commission decisions and arguments against recovering those costs from consumers have no merit, even beyond the end of the settlement agreement in 2017.

"We believe they are improper issues," Burnett said. "All of the issues have been included in the (state) settlement agreement."

Ivan Penn can be reached at ipenn@tampabay.com or (727) 892-2332.

Better to abandon nuclear plans, report says

Ratepayers in Florida, Georgia and South Carolina would be better off "eating" $6 billion already invested in unfinished nuclear reactor projects and focusing instead on producing or conserving the same amount of electricity by cheaper means.

So concludes a report scheduled to be released Thursday by economic analyst Mark Cooper of the Vermont Law School Institute for Energy and the Environment.

Cooper, a longstanding critic of the costs of nuclear power, said that by absorbing billions of dollars already committed to nuclear plant development now, ratepayers in all three states will avoid tens of billions of dollars in costs for risky nuclear plant projects.

In all there are five planned nuclear projects among the three states. Duke Energy's Levy County project and Florida Power & Light's proposed two-reactor project in South Florida are still in the planning stages. There are two other similar sized projects in South Carolina and one in Georgia.

Consumer advocate says nuclear plant fiasco means financial 'armageddon' 03/12/13 [Last modified: Tuesday, March 12, 2013 11:34pm]

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