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Florida Supreme Court justices seem to back advance fee for nuke plants

TALLAHASSEE — The Florida Supreme Court showed little sympathy Thursday for a challenge to a law allowing utilities to charge customers in advance for construction of nuclear plants.

"This court can't step into the shoes of becoming a super regulator," said Justice Barbara Pariente.

The court heard oral arguments in a suit by the Southern Alliance for Clean Energy, which contends the law is too vague and gives "unbridled discretion" to the state Public Service Commission to force customers to pay for nuclear plants that might never be built or become too expensive.

But Justice R. Fred Lewis indicated that contention is not a sufficient argument.

"It's impossible to put everything in the statute," Lewis said.

Justices questioned why the Southern Alliance waited years before challenging the law, since utilities have been collecting advance fee money from customers since 2009.

Gary Davis, an attorney for the Tennessee-based Southern Alliance, said the group did challenge the spending before the state Public Service Commission and went to court only after those attempts failed.

"The problem is there's nothing in the statute to say . . . enough is enough," Davis said. The statute, he said, "doesn't provide any adult supervision" over how the utilities spend the money they are collecting.

State lawmakers passed the Nuclear Cost Recovery fee in 2006 as a way to hasten construction of nuclear plants, which they thought would help diversify Florida's energy mix.

At the time, Progress Energy Florida proposed to build two nuclear reactors in Levy County at a price of $4 billion to $6 billion with a start date of 2016. The cost of the project has ballooned to $24 billion, and the plant isn't expected to begin producing power until at least 2024 — if at all.

Without the advance fee, Progress Energy says it will not build the Levy plant.

Florida Power & Light proposes to build two new reactors at its Turkey Point power station. Both utilities are seeking their operating licenses from the Nuclear Regulatory Commission.

Samantha Cibula, associate general counsel for the PSC, and attorneys for Progress and FPL said the utilities have demonstrated they do intend to build their plants because of their ongoing efforts to acquire licenses and development of engineering and other plans.

Cibula said every year the commission examines the utilities' spending and the feasibility of building the plants. "We look to see that that cost is prudent," she said.

FPL's approach to the advance fee differs markedly from Progress'. FPL has spent far less advance fee money, less than $600 million, than Progress, which has spent more than $1 billion. And FPL spent some of its money to increase the output of existing plants by more than 500 megawatts — almost the equivalent of a new nuclear plant .

Progress has spent $1.1 billion for the proposed Levy project alone. And it has put hundreds of millions more into upgrades to the existing Crystal River nuclear plant. But that plant has been broken since 2009. Given estimated repair costs of upward of $1.5 billion, Progress may well decide not to put it back into operation.

The justices did voice concern about the utility's ability to continually collect from customers and make money if they do not deliver all of what they propose or if costs become excessive.

"When is it too high for the customers?" asked Justice James E. C. Perry.

Added Pariente: "The utilities are in a win-win situation. They haven't lost anything. Somebody's making a lot of money."

Progress attorney Stephen Grimes, a former state Supreme Court justice, said the utilities aren't profiting from the advance fee. "It's not a win-win," Grimes said. "Nobody's making money."

The Tampa Bay Times has previously reported that Progress will pocket $150 million from the advance fees it has collected for the proposed Levy project, whether the utility builds the plant or not.

Stephen Smith, the Southern Alliance's executive director, said he was not troubled by the tough questioning from the court. He said his organization "knew going into this that there is a high bar. We didn't expect it to be easy."

No matter the outcome, he said, his organization will continue working to repeal the law because the utilities are simply taking advantage of customers and, contrary to Grimes' assertion, are making money doing it.

"For the utilities," he said, "it's just easy money."

Contact Ivan Penn at ipenn@tampabay.com or (727) 892-2332.

Facing opposition

Three of the justices who took part in Thursday's hearing, Pariente, Lewis and Peggy Quince, have been at the center of another recent story. The Republican Party of Florida is campaigning against them in November's election, when they face a merit retention vote. The justices do not face opponents, but voters are asked every six years to vote yes or no on whether they should remain on the job. The GOP's opposition centers on a 2003 decision in which the justices voted to give a new trial to the defendant in a murder case.

Florida Supreme Court justices seem to back advance fee for nuke plants 10/04/12 [Last modified: Thursday, October 4, 2012 11:17pm]
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