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PSC votes in favor of passing $140 million in fuel costs along to Progress Energy customers

TALLAHASSEE — Progress Energy customers have to pay $140 million next year for electricity the utility purchases while the company's broken Crystal River nuclear plant is off line, the state Public Service Commission unanimously ruled Tuesday.

PSC staff had recommended Progress Energy customers keep paying for the needed electricity instead of waiting to see whether the utility should bear the financial responsibility for costs caused by a troubled repair project.

The five-member commission agreed with its staff, saying putting off costs could lead to "rate shock," or much higher bills in 2013 and 2014. Better to start paying now than get hit with large increases later.

The decision disappointed consumer advocates who wanted commissioners to wait until a hearing scheduled for June, during which the panel will determine whether Progress mishandled the maintenance and upgrade project at the nuclear plant that led to the expenses.

"This puts the burden squarely on the backs of the ratepayers," said J.R. Kelly, head of the Office of Public Counsel, which represents consumers in rate cases.

The extra cost for fuel, which is used to generate electricity, is the biggest 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 fuel charge amounts to an increase of about $4 a month.

The average customer's monthly bill in 2012 will also include a 54-cent increase for environmental compliance and a $2 increase for purchased power, which allows the company "to lock agreements for more natural gas-fired purchased power" at today's prices, the company said.

The project to replace old steam generators was supposed to cost $230 million. 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. It then cracked a third time in the summer.

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 PSC staff for next year.

The $140 million could be refunded to customers if the PSC later finds that Progress Energy did not act prudently in handling the steam generator replacement project.

"Right now Progress is just trying to make sure that they're solvent," said Chairman Art Graham after the cost-recovery discussion. "They've spent the cost already, so let's reimburse them for the cost that they spent."

The sentiment among commissioners: The utility should be innocent until proven guilty.

"The utility deserves an opportunity to present its full case, and we will give that the full weight that it's due," said Commissioner Julie Brown.

Kelly and other groups disagreed with the commissioners' approach, saying the burden should be on Progress to prove it was judicious in its repairs before collecting money from customers.

"(The decision) presumes that Progress was prudent," said Jon Moyle Jr., attorney for the Florida Industrial Power Users Group. "We don't think that was a fair presumption at all."

The average industrial customer bill will increase by about 4 to 5 percent, Progress Energy said.

Commissioner Lisa Polak Edgar said she did not want the commission's decision to inadvertently influence the review by the company's insurer, Nuclear Electric Insurance Limited, or NEIL, which is trying to determine if the project is covered by the utility's insurance policy.

"There is a certain amount of emotion and rhetoric that is surrounding some of those larger issues," she said, "but what I know is that substantial, confident evidence has not been presented to us as a commission."

Sen. Mike Fasano, R-New Port Richey, who this month appealed to the Senate utilities committee chairman to call Progress Energy in for questioning about the plant, called the commission's decision an outrage. Why should customers have to pay for the company's mistakes, he asked.

"They have shareholders who should shoulder the cost of the damaged plant, and not the customers," he said.

Katie Sanders can be reached at or (850)224-7263.

PSC names chairman

The Public Service Commission opened its Tuesday meeting by naming a replacement for its chairman, Art Graham. The five-member commission agreed his successor should be Ronald Brisé, 37, a Charlie Crist appointee and former state representative from North Miami. Brisé, a Democrat, resigned his House seat in July 2010 to join the commission. Gov. Rick Scott reappointed him for a term through January 2014. His chairmanship begins Jan. 2 and lasts through 2013.

PSC votes in favor of passing $140 million in fuel costs along to Progress Energy customers 11/22/11 [Last modified: Tuesday, November 22, 2011 11:55pm]
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