As the regulator for the state's largest power companies, you would think the Florida Public Service Commission would be doing everything it can to help customers save money on their electric bills during these tough economic times. Unfortunately, the commission is doing just the opposite.
Recently the PSC approved charging utility customers nearly $300 million for proposed nuclear projects by Florida Power & Light and Progress Energy, including four proposed reactors that neither company guarantees it will ever build. The fact is, Florida businesses and residents may never receive one kilowatt of electricity from those reactors in the future, yet their customers are paying more on their monthly bills now.
In 2006, the Legislature passed a bill to promote nuclear reactor construction. The law shifted the cost and financial risk of reactor construction off utility shareholders and onto customers by allowing companies to recover financing and construction costs, known as "nuclear-cost recovery," even if the reactors are never completed. Utilities get an extraordinary rate of return, greater than 10 percent, to offset this risk. None of my investments are getting anything near 10 percent in today's market — how about yours?
The Legislature, in response to aggressive lobbing by the power companies, gave them more money sooner with less risk. Now the estimated costs for the nuclear plant have skyrocketed to $20 billion each for FPL and Progress Energy, demand has dropped and risks have increased after events in Japan. Yet the companies continue to pocket ratepayers' money.
In fact, in a just-announced settlement agreement, Progress Energy created more uncertainly about its plans to build two new nuclear reactors in Levy County while it struggles with major engineering mistakes that led to extensive cracking of the safety containment dome on its troubled Crystal River reactor. The settlement should serve as proof to the PSC that such projects are not fiscally feasible in the current economic climate. As every resident of Florida knows, today's economic realities are far different than the rosy projections from 2006 when this "nuclear tax" was hatched.
What is needed is for the governor, Legislature and PSC to promote good utility planning with a diverse portfolio of energy options that includes energy efficiency and renewable energy in addition to the existing energy infrastructure.
Yet in another bad decision, the PSC let FPL and Progress Energy propose anemic energy efficiency targets, denying customers programs that would reduce energy use and lower their monthly bills. These targets use antiquated, inadequate efficiency programs that were designed more than seven years ago, rather than today's best practices to help customers save energy and money.
Compared to leading utilities in states such as Arizona, Iowa and Pennsylvania, Florida's largest utilities achieve less than one-fifth of the energy savings through efficiency. FPL's approved goals were already lower than those being implemented by Gulf Power, also here in Florida, yet the state's largest utility fought the directive to help customers reduce energy use, stating it would cost them too much. Progress Energy, which in the Carolinas is striving for national leadership levels in energy efficiency, argued for the status quo here in Florida — and got it.
It makes no sense to pay for reactors whose completion dates have been pushed out to more than a decade in the future — if they are ever built — while simultaneously suggesting that helping customers save money through efficiency measures cost too much.
The Southern Alliance for Clean Energy has filed appeals with the Florida Supreme Court to overturn both commission decisions. Our appeals ask the judicial branch to restore the checks and balances needed to protect consumers from a Legislature that has given "unbridled discretion" to a PSC that appears to be a captive agent of the power companies it is meant to regulate and provide ratepayers protection from. Regardless of how the court rules, all Floridians should be troubled by policy decisions at the PSC that burden customers with higher costs and more risk from speculative nuclear reactor projects. The PSC should challenge power companies to provide customers with efficiency programs that squeeze more work from each kilowatt hour and actually help reduce energy bills, not transfer wealth from ratepayers to power companies' shareholders and fuel utility executives' bonuses.
Stephen A. Smith is the executive director of the Southern Alliance for Clean Energy, a nonprofit organization dedicated to finding clean energy solutions in the Southeast.