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Progress Energy deal for $288 million refund will temper customers' rate increases

TALLAHASSEE — Here's what Progress Energy customers should expect from a $288 million refund they'll get over the next few years: higher electric bills. But if a settlement between the utility and the Public Counsel's Office is approved, their bills will not go up as much as they otherwise would.

The average customer's bill on Jan. 1 is expected to increase $4.93 a month per 1,000 kilowatt hours of usage, from $123.19 to $128.12, subject to adjustments for fuel costs.

J.R. Kelly, the state public counsel who represents customers before the Public Service Commission, called that a win.

"Yes, there is some increase, but I think a big portion of this settlement is balancing that with what we could potentially have seen," he said. "We could have been looking at doubling that and in five years five times that."

The cost analysis came as part of Monday's public hearing before the PSC on the proposed settlement between Progress Energy and consumer advocates over the damaged Crystal River nuclear plant.

On Wednesday, the five-member commission is scheduled to vote on the agreement, which includes what a lawyer for the Florida Retail Federation called "the largest refund in electric utility history that we know of." The agreement is expected to win commission approval.

The settlement, announced last month after months of investigation into the cause of three cracks in Crystal River's 42-inch-thick concrete reactor containment building, addresses some concerns about Progress' multibillion-dollar nuclear ambitions and how its customers would pay for them.

Under the agreement, customers will receive a refund of $288 million spent to purchase alternative electricity after the utility took the Crystal River nuclear plant offline in fall 2009 to replace old steam generators. Progress botched the project, severely damaging the containment building. Current estimated repair cost: $2.5 billion.

The plant's future remains unclear because Progress said its insurer, the Nuclear Electric Insurance Limited, is refusing to "voluntarily" pay the full amount allowed under its insurance policy.

As another part of the proposed settlement, Progress negotiated the right to cancel the engineering, procurement and construction contract on its proposed Levy county nuclear plant.

Consumer advocates agreed they would not oppose canceling the contract while gaining agreement that future customer payments on the Levy project be limited to $3.45 a month for the average customer for five years. Those costs could have reached $20 or more under Progress' projected figures.

"The settlement agreement before you is fair, just and reasonable," said Alexander Glenn, a Progress lawyer.

It remains unclear whether the damages at Crystal River — the utility's only existing nuclear plant in Florida — will ever get fixed. Progress also faces multiple challenges to its federal operating license application to build two reactors on a 3,000-acre site in Levy County.

The latest will be detailed today by the Nuclear Information and Resource Service, a citizen and environmental research and activist organization. In a filing with the Atomic Safety Licensing Board, a division of the Nuclear Regulatory Commission, it accuses the state and the utility of violating Florida law by allowing Progress to draw water from the Cross Florida Barge Canal to supply the proposed nuclear plant. State law restricts use of the barge canal water to conservation and recreation.

A finding that Progress violated state law could bring more delay to the already off-schedule project and further drive up a price tag initially set at $4 billion to $6 billion. That figure has now reached at least $22.5 billion.

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

Progress Energy deal for $288 million refund will temper customers' rate increases 02/20/12 [Last modified: Monday, February 20, 2012 10:49pm]
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