Progress Energy Florida's announcement last week that it wants to roll back surcharges was welcome relief for electric customers still whipsawed from January's 24 percent rate increase. The impact of the 11 percent reduction is likely temporary, as the company said it would seek a base rate increase for 2010. But the delay gives the Florida Legislature a short reprieve to recraft a controversial 2006 law that allowed utility companies to start charging their customers for new nuclear plants before the plants are built and generating power.
The St. Petersburg-based utility is asking the Public Service Commission to lower two surcharges starting April 1. One surcharge is for fuel costs — which are less than the utility had anticipated. The utility also said it would defer collection of two-thirds of a second surcharge for the construction of a $17 billion nuclear plant in Levy County. The two changes would mean the $27 increase per 1,000 kilowatt hours that customers saw in January would fall to about $12. That is welcome relief, particularly in this economic climate.
Explanations about why the utility concluded it could forgo some payments for the nuclear power plant construction for now — when it insisted in December the money was vital to the plant's continued construction — aren't entirely satisfying. The company said it had the ability to reduce the payment in the short term as it continued to try to find a co-investor, which could eventually lower consumers' costs, and as lawmakers debate consumer-friendly changes to a 2006 law.
The law allows utilities to assess customers for plant construction as the money is spent. Progress Energy, the first utility to take advantage of the provision, plans to assess customers $5 billion toward the $17 billion Levy County plant before it opens in 2017. Besides reducing utilities' risks, the law was aimed at shoring up confidence among lenders and spreading costs over a longer period of time.
But lawmakers were not prepared for the backlash, particularly in this economy, when Progress Energy customers found an extra $11.42 surcharge per 1,000 kilowatt hours on their January bills for a nuclear power plant that won't be in operation for another eight years. Plus, it was paired with a $15 increase for fuel charges and other increases.
Sen. Mike Fasano, R-New Port Richey, who voted for the original bill, is now leading the charge to find a way to reduce the immediate financial impact on consumers — possibly by spreading the financing over a longer time. Legislators should continue to explore the options. Meanwhile, the PSC should quickly approve Progress Energy's request to lower its surcharges and thoroughly scrutinize the company's request to raise its base rate for 2010.