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Subsidizing nuclear plants in Florida runs counter to capitalism

It's time to drink the Tallahassee Kool-Aid.

That's the only way we can possibly understand how our state leadership — claiming to be big fans of the free market system — can bless a state law that lets power companies like Progress Energy and Florida Power & Light make their customers pre-pay the costs of billion-dollar projects that may or may not ever happen.

Last month, the automatons at the Florida Public Service Commission approved rules requiring customers of our two largest electric utilities to pay $282 million next year to upgrade nuclear plants and build new ones, even if such projects never happen.

Of that $282 million, $86 million will be paid by Progress Energy Florida customers. The charge will help pay some of the early costs for two proposed Levy County nuclear units and for adding capacity to an existing nuclear plant at Crystal River. This is the same plant Progress Energy broke two years ago trying a do-it-yourself repair. Cost to fix? $2.5 billion.

That $86 million is just the start. In coming years, Progress Energy expects to rapidly escalate the annual charges it would impose on Florida customers to cover more of the high costs of building a modern day nuclear power plant.

In 1984, George Orwell's novel of a dark future, three turned-upside-down sayings are celebrated. War is Peace. Freedom is Slavery. Ignorance is Strength.

Well, let's add another: Socialism is Capitalism.

Come, Comrade Ratepayers! You will gladly pay us your hard earned money today for tomorrow's collective good so that great nuclear power plants might be built many years from now.

Thank goodness economist Milton Friedman is no longer around to witness this free market miscarriage.

Back in 2006, Progress Energy and Florida Power & Light insisted they needed a new state law allowing them to charge customers in advance. Why? Back then, the power companies said this was the only way to persuade investors to put up the money for nuclear plants then estimated to cost $4 billion. (Now it's $10 billion per reactor and climbing.)

In other words, the free market then did not like the return on a new nuke plant without a big subsidy. The market probably likes it even less now that the price is so much higher.

We can thank the "capitalists" in our state Legislature back in 2006 for first introducing a bill — drafted by Progress Energy and signed by Gov. Jeb Bush — that streamlined big projects like new nuke plants by simply billing customers in advance.

And all this time I thought capitalism was about taking risks in exchange for possible rewards. I thought capitalism was about competition. I thought shareholders who invested in publicly traded companies (like Progress Energy) got richer when the company performed well and lost money when it did not.

Something stinks here.

In Florida, Gov. Rick Scott and top legislators claim to be focused on two things to revive our Florida economy. Reduce taxes to attract new businesses and create more jobs. And cut government regulation so that businesses can compete with less red tape.

Yet here's a law in effect empowering Progress Energy to "tax" Florida customers for pricey future projects without the hassle of borrowing money or shouldering risk.

If we have to bend the rules so much to justify nuclear plants, maybe there's something wrong with the business model.

There ought to be a law. Wait, that's what got us into this mess in the first place.

Contact Robert Trigaux at trigaux@sptimes.com.

Subsidizing nuclear plants in Florida runs counter to capitalism 11/01/11 [Last modified: Tuesday, November 1, 2011 10:43pm]
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