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Florida House hears arguments over controversial nuclear advance fee law

The Florida House broke its silence on the controversial nuclear cost recovery law Wednesday and, for the first time in years, allowed a workshop hearing into the 2006 measure that allows electric utilities to charge customers for nuclear plants before they are built.

For years, legislators in both the House and Senate have filed bills to repeal the measure, alleging that it's a bad deal for customers, but the proposals never got a hearing. This year, three Republican senators have filed legislation to modify the law and the Senate conducted a hearing on the measure last week.

The law has put Progress Energy Florida customers on the hook for $1.5 billion even if the utility decides not to build the plant in Levy County. Progress also gets to pocket $150 million of the $1.5 billion, whether the plant is built or not.

Opponents say the law allows utilities to raise rates on customers so they can shift the risk of financing nuclear development projects from utility shareholders.

The utilities say the cost shift from shareholders to customers saves customers more money in the long run because it allows the company to invest in the expensive nuclear projects, expand Florida's fuel diversity and be prepared for the increasing costs of natural gas.

But legislators in both the House and Senate now say they are open to modifying the law, and a nuclear expert gave the House several suggestions.

"I do think the appetite is there for a bill,'' said Rep. Jose Felix Diaz, R-Miami, chairman of the House Energy and Utilities Subcommittee, after Wednesday's workshop. "There's a lot of folks that want to see something, whether it's a revision or repeal."

He said that it's "too early to tell" whether the House action will come in the form of a committee bill or whether it will wait for the Senate bill.

The proposed Senate bill would give utilities until 2015 to start building nuclear plants or forfeit collecting any more money from the so-called advanced nuclear cost recovery fee.

Peter Bradford, a professor at the University of Vermont and a former member of the Nuclear Regulatory Commission, told the House committee that Florida's law lacks many of the traditional safeguards that have been put in place by other states.

He suggested Florida legislators revise the law to at least protect customers from cost overruns and plant cancellations, cap the amount customers must pay, require that plants be at least 50 percent constructed to collect the fees, and require regulators to conduct a rigorous review every few years to determine if the plan is in the best interest of customers.

Bradford also suggested that the Public Service Commission tap into the growing market for alternative energy production by using competitive bidding to run periodic auctions "to see what the independent producer power community would be able to offer for 15,000 megawatts of demand."

"In other parts of the country, these auctions tend to produce pleasant surprises, whereas nuclear construction tends to produce unpleasant surprises,'' he said.

But executives for both Florida Power & Light and Progress Energy Florida urged the committee to leave the law in place. Steve Scroggs, senior director for nuclear development at FPL, said his company spent $2.9 billion on expanding its St. Lucie County nuclear plant to include 500 megawatts of new energy and upgrading its Turkey Point plans, but customers paid only $320 million for it, saving customers $100 million in fuel costs.

Without the cost recovery law, he said, "the cost would be passed along to customers."

Progress Energy Florida president Alex Glenn said that his company continues to move forward on plans to build a two-reactor nuclear plant in Levy County. He said that conducting an auction is not feasible for Florida and nuclear power is essential to maintaining a diverse mix of affordable fuels.

"The one point to take away from today is, there are no magic bullets here,'' he said. "We're taking steps to maintain nuclear for the future of our state. Right now, we need an 'all of the above' approach."

Florida House hears arguments over controversial nuclear advance fee law 03/27/13 [Last modified: Wednesday, March 27, 2013 10:43pm]
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