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Lawsuit targets Duke Energy Florida, FPL over higher rates for nuclear power projects

A class-action lawsuit was filed against Duke Energy Florida and Florida Power & Light Co. alleging the monopoly electricity providers force millions of Florida customers to pay unlawful charges in connection with their electricity rates to fund the companies' nuclear power plant projects, some of which have been abandoned.

The suit was brought Monday by the law firm Hagens Berman in the U.S. District Court for the Southern District of Florida. It accuses Duke Energy Florida and FPL of overcharging through unconstitutional price hikes that increase customers' electricity bills in order to fund nuclear construction costs.

The issue ranks among the most controversial in recent Florida history, forcing customers of monopoly utilities to take on the financial risk of building nuclear power plants, projects prone to extreme cost overruns. Such utility projects historically have been financed by banks and Wall Street, with the risks borne by Duke and FPL shareholders, not by ratepayers.

The suit claims Duke Energy Florida, which provides the bulk of electricity to the Tampa Bay and west-central Florida areas, unlawfully charged customer higher rates to cover more than $1.2 billion in expenses at its Crystal River nuclear power plant in Citrus County and at its proposed (and now shelved) Levy County nuclear plant site. Similar claims are made in the suit against FPL, Florida's largest utility, for expenses tied to its nuclear power plants, including two new ones proposed at its Turkey Point site in South Florida.

At the core of this dispute, according to the lawsuit, are nuclear costs imposed on ratepayers by orders of the Florida Public Service Commission under a law passed in 2006 by Florida legislators and approved by then-Gov. Jeb Bush. That law created a nuclear cost recovery system that, the suit states, "makes ratepayers into involuntary investors in nuclear projects, charges them interest on their own money, and never returns their 'investment.' When the projects are abandoned, the utilities keep the money and collect even more."

"These two utilities have racked up huge expenses with nuclear power plant projects — some of which they completely abandoned — and have left ratepayers holding the bag," said Steve Berman, managing partner of Seattle-based Hagens Berman. "We believe the consumers in this instance are being forced to pick up the tab for Duke Energy Florida and FPL in violation of their constitutional rights."

Berman served as a special assistant attorney general and lead counsel for the largest settlement ever — $206 billion — against the tobacco industry, as well as counsel for major antitrust, ERISA (pension) and U.S. securities cases. He recently represented 20 million class members against Toyota for its sudden unintended acceleration defect and subsequent economic loss to vehicle owners. The result was the largest settlement ever, $1.6 billion, against an automotive company.

The suit against Duke Energy and FPL seeks relief for anyone who is a customer of either of the utilities, including reimbursement from the companies for costs passed on to the customers to fund the companies' nuclear projects. It also seeks to nullify as unconstitutional the nuclear cost recovery system and all nuclear cost recovery orders issued by the PSC. And it seeks an order enjoining defendants from further unlawful charges.

Duke Energy, in a statement Tuesday, said it believes the lawsuit should be dismissed.

"Four other lawsuits challenging the constitutionality of Florida's nuclear cost recovery statute have been found to be without merit and rejected by Florida courts. Duke Energy is evaluating this lawsuit and will respond based on the facts and applicable law."

Two plaintiffs represent the proposed class action lawsuit. One is Clearwater resident and Duke Energy Florida customer Bill Newton, who serves as deputy director of the Florida Consumer Action Network. The other is Naples resident and FPL customer Noreen Allison, a retired worker with the U.S. National Park Service.

Contact Robert Trigaux at rtrigaux@tampabay.com. Follow @venturetampabay on Twitter.

Lawsuit targets Duke Energy Florida, FPL over higher rates for nuclear power projects 02/23/16 [Last modified: Tuesday, February 23, 2016 9:39pm]
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