The Florida Public Service Commission has made a prudent decision by cutting the charges related to nuclear energy that Progress Energy customers will pay next year. The economy remains difficult, the projected cost of a new nuclear plant proposed for Levy County is rising, and it is not a certainty the plant will be built even as customers are being billed for preliminary costs tied to the project.
The PSC voted Monday that Progress Energy customers should pay about $86 million next year toward costs associated with the proposed nuclear plant and for an upgrade related to its nuclear plant in Citrus County, which is shut down for repairs. Commissioners embraced the argument by the public counsel, who represents ratepayers, that Progress Energy's request for $141 million should be reduced by $55 million. Customer charges for new nuclear generation will drop by $2.60 a month next year — and in this economy, every little bit helps.
Most of the nuclear costs — $60 million of the $86 million — will be earmarked for deferred expenses tied to the proposed nuclear plant in Levy. Progress Energy had sought $115 million for those expenses, but the PSC wisely stuck to an earlier plan to spread out the costs over a five-year period. Of the remaining $26 million, $5.6 million is earmarked for improvements to the Citrus nuclear plant and the rest to other costs tied to the proposed Levy plant.
A controversial 2006 law allows utilities to start billing customers for costs tied to new nuclear plants years before they are built and start generating power. There is an argument that other capital projects such as highways and schools are often paid for as they are built by residents who may not be around to realize their full benefit. And Progress Energy notes it already has spent more on preparing for the new nuclear plant than it has collected from ratepayers.
But the proposed Levy plant has yet to be approved by federal regulators, its projected cost is five times the original estimate, and it would come on-line years later than initially expected. When the plans for the nuclear plant were announced in 2006, it was projected to cost $4 billion and come on-line in 2016. The latest cost estimates have soared to $20 billion, and the plant would not generate power until at least 2021. With changes in exploration for natural gas and in the economics of renewable energy sources, the calculations are evolving about the smartest ways to generate electricity.
Until all of this shakes out and the economy improves, spreading out the nuclear-related costs to lessen the impact on Progress Energy customers, as the PSC has chosen to do, remains the fairest approach.