This column appeared in the Jan. 16, 2012 edition of the Tampa Bay Times.
The nuclear industry's business plan in Florida is to socialize the risk and privatize the profit, and it persuaded state officials to set it up that way. In 2006, the Legislature passed a bill allowing utilities to charge ratepayers for the cost of building new nuclear reactors long before those reactors produce any energy.
Both Florida Power & Light and Progress Energy Florida want to build two new reactors, and by the end of 2011, their customers have been forced to pay more than $772 million for these projects, regardless of whether the reactors ever get built. Never mind that, according to a new study, nuclear power is one of the most costly ways to meet Florida's future electricity needs.
That report, "Big Risks, Better Alternatives," concludes that Florida ratepayers would be better served by investments in energy efficiency and home-grown renewable energy resources than building new reactors. The Union of Concerned Scientists commissioned Synapse Energy Economics, a nationally known consulting and research firm, to produce the report, which was released in October.
Granted, there is no incentive for FPL or Progress Energy to aggressively promote energy conservation. They are in business to sell power. But what about the state Legislature and Public Service Commission, which are supposed to represent the public interest?
Unlike 22 other states, Florida doesn't have a statewide efficiency standard requiring utilities to help ratepayers save energy. In those other states, utilities have set up a range of programs, including ones that provide rebates for buying energy-efficient appliances and low-interest loans to finance home improvements.
Likewise, Florida invests relatively little in energy efficiency. Overall, it ranks 27th in the nation, according to the American Council for an Energy-Efficient Economy's 2011 State Energy Efficiency Scorecard. Last year, Florida spent only $6.60 per state resident on energy-efficiency programs, well below the national average of $14.87. The five top states — Vermont, Massachusetts, Connecticut, California and Minnesota — invested from $30.28 to $54.62 per resident.
Three years ago, Florida lawmakers did require FPL and Progress Energy to ramp up their efficiency programs. In July, however, the PSC ignored the law and threw out their plans because of the modest cost to implement new programs, despite the fact that they would lower ratepayers' electric bills.
As it turns out, the potential to reduce demand for new power plants is huge. A 2007 ACEEE study, for example, found that energy-efficiency programs could reduce Florida's future electricity use by nearly 20 percent. Regardless, the PSC recently allowed Progress Energy to cut its energy efficiency program targets from a modest 3.5 percent to a paltry 2 percent over the next decade. If Progress Energy pursued an efficiency target of 15 percent over the same time frame, it could keep energy use below the state's peak 2006 levels, making expensive new plants unnecessary.
Florida also has a poor track record developing renewable energy sources. Currently 29 states and the District of Columbia have standards requiring local utilities to generate from 10 percent to 33 percent of their electricity from renewable sources, such as wind and solar, by a specific year. Several other states have voluntary targets. Florida has neither.
It's a lost opportunity. According to government and independent data, Florida has the technical potential to meet about 40 percent of its 2010 electricity needs with renewables, including solar, biomass, and smaller amounts of landfill gas and offshore wind. While the economic potential for these renewable sources may be lower, together they would curb Florida's dependence on nuclear power, coal and oil.
Instead of prodding FPL and Progress Energy to promote conservation and invest in renewable energy, the PSC in October approved rate increases for both utilities to pay for their proposed nuclear projects. The unanimous vote approving $282 million in "cost recovery" boosts the total amount charged to the two utilities' customers in advance to more than $1 billion.
Meanwhile, the price tag for Progress' Levy County reactors has skyrocketed from $3.5 billion for one reactor to $22.5 billion for two. Given the Levy project's history — and the industry's past performance — the cost of the plant could be as high as $29.3 billion, according to the Synapse analysis. And that would mean higher rates for Progress Energy customers. Synapse estimated that by 2021, the Levy reactors would add at least $718 a year to the average Progress Energy residential customer's bill.
Fortunately Florida can develop cheaper, safer alternatives that can be deployed much more quickly than new nuclear reactors. The Synapse study shows that energy efficiency, wind power, biomass and natural gas are all cheaper than nuclear power, and solar energy's costs are declining quickly. Florida does not need new nuclear power plants to meet its electricity needs, and ratepayers should not be forced to shoulder the burden of paying for them.
Ellen Vancko is the nuclear energy and climate change project manager at the Union of Concerned Scientists in Washington.