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Progress Energy bills likely to rise to pay for cost of idle nuclear plant

Progress Energy customers moved a step closer to having to pay $140 million next year for electricity the utility purchases while its broken Crystal River nuclear plant sits offline.

The state Public Service Commission's staff recommended this week that Progress customers keep paying instead of waiting to see whether the utility should shoulder the financial responsibility for the costs caused by a troubled repair project.

Those extra costs are a part of the reason the average Progress customer's bill is expected to increase about 3 percent to $123.19 for 1,000 kilowatt hours of usage, starting Jan. 1.

The five-member Public Service Commission is expected to vote on the staff recommendation during its meeting Nov. 22.

The state Office of Public Counsel and several other groups advocating for consumers — including the Florida Retail Federation — oppose having customers pay the $140 million now. They say the commission first should determine whether Progress mishandled a maintenance and upgrade project at the nuclear plant that led to the expenses.

The project was supposed to cost $230 million to replace old steam generators. But the concrete nuclear reactor containment building cracked after Progress Energy made the unprecedented decision to manage the project itself, instead of hiring an outside specialist. When the utility tried to repair the building and bring the plant back online, the wall cracked again.

The reactor has sat idle for two years and won't return to service for at least two more. And the repair bill and related costs are expected to exceed $2.5 billion, with Progress asking customers to pick up a quarter of those costs, including the $140 million recommended by the PSC staff for next year.

The PSC will review Progress' handling of the Crystal River project during a hearing in June.

If the commission determines Progress' handling of the project was not "reasonable and prudent," customers would not be responsible for paying for the repairs or the related costs. Those costs would be passed on to Progress' investors. Any money customers have paid would be refunded with interest that would amount to less than 1 percent.

This year, customers are already paying $110 million toward expenses for what is emerging as one of the costliest nuclear incidents in U.S. history.

"A big concern of ours is the customers keep getting saddled with these costs," said Charles Rehwinkel, deputy public counsel. "It just seems to be stacked against the customers. All the decisions that were made and all the errors that were made were made by the company."

The PSC staff said in its recommendation that past decisions have shown the commission allows utilities to recover reasonable expenses incurred to provide electricity. And in 2010, the commission allowed Progress to charge customers for buying alternative electricity while the nuclear plant was offline. Unless the PSC finds the utility at fault for the broken nuclear plant, the staff said, "the commission's past practice of allowing cost recovery of reasonable projected costs … should continue."

In addition, the PSC staff noted that paying a little now will help save customers from bigger increases later as more repair bills and additional electricity costs accumulate.

Suzanne Grant, a Progress spokeswoman, said she had not seen the PSC staff recommendation yet, but the utility will carefully review it. She did say if the PSC later determined that money should be refunded, the utility would abide by whatever process the commissioners established.

Rehwinkel said that too many issues regarding the broken Crystal River plant are still unfolding — and are notably unprecedented — to make customers pay in advance. He worried that any refund would likely be paid out in increments, further harming Progress Energy customers.

"The travesty would be, if the customers win this fight, the refund would be spread out over time," Rehwinkel said. "If they have to then get it back in little pieces over a year or two, that's asking a lot."

Ivan Penn can be reached at ipenn@sptimes.com or (727) 892-2332. Follow him on Twitter at www.twitter.com/Consumers_Edge and find the Consumer's Edge on Facebook.

Progress Energy bills likely to rise to pay for cost of idle nuclear plant 11/15/11 [Last modified: Wednesday, November 16, 2011 5:47am]
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