1. Business

Florida Senate passes rewrite of nuclear advance fee

Published Apr. 26, 2013

TALLAHASSEE — The Florida Senate on Friday passed a bill that for the first time attempts to scale back the unpopular nuclear fee on customer utility bills by tightening oversight by the state's utility regulators.

SB 1472 imposes new restrictions on the "early cost recovery" law passed in 2006 that allows electric companies to impose pre-construction costs for nuclear projects without any guarantee that the projects will be built. The bill passed unanimously with no discussion and will be sent to the House, which will take up a similar bill next week, the final week of the 60-day legislative session.

"The significance of this is it creates a process that, for the first time, only allows rate recovery for the process of obtaining a license,'' said Sen. John Legg, R-Trinity, who along with Sens. Wilton Simpson, R-Trilby, Jack Latvala, R-Clearwater, and Jeff Brandes, R-St. Petersburg, are sponsors of the Senate bill.

The Senate bill prohibits Progress Energy and Florida Power & Light from collecting the nuclear fees after July 1 unless they have shown proof of their intent to pursue a license for a nuclear reactor from federal authorities. The PSC has the power to determine how to interpret intent.

Once a company acquires a license, the bill triggers a review by the Public Service Commission to determine if it is moving the project forward. It also requires the company to justify the entire project instead of just the expenses. If regulators determine that the company is serious about its intentions to pursue a permit for a nuclear reactor, the bill reduces the interest rate on their capital costs, potentially saving customers $800 million over the 20-year life of the project.

"It still will allow nuclear projects to move forward but only based on the license,'' Legg said.

Since 2006, Progress Energy has charged customers more than $1 billion to expand the now-crippled Crystal River nuclear power plant and to start developing a new nuclear power plant in Levy County. The company terminated the Crystal River project but has kept $150 million of the money in profits from all its projects.

Florida Power & Light collected $530 million from the nuclear fee and used the money to finance expansions to its existing power plants at Turkey Point and in St. Lucie County. It has also proposed building two new reactors at Turkey Point but has not obtained a permit to do it.

Voter discontent with Progress Energy's troubled power plant has prompted four Tampa Bay area senators to take the more aggressive approach to revamping the law, although they have stopped short of repealing it.

"The Florida Senate has recognized the flawed policy that charges consumers in advance for risky and expensive new nuclear reactors," stated Susan Glickman, a consultant for Southern Alliance for Clean Energy which has urged lawmakers to repeal the 2006 law because it shifts the financial risk of building new nuclear reactors from companies to its customers.

"The bill which passed the Senate today offers more procedural protections for consumers although the devil is in the details,'' Glickman said. "Its impact is highly dependent on a rigorous review by the Florida Public Service Commission."

Progress Energy and FPL have repeatedly said they oppose the legislation but they have not forcefully lobbied against it.

Stephen Smith, executive director of Southern Alliance for Clean Energy, expressed skepticism that the PSC, whose members are chosen by a legislatively-controlled commission, would be aggressive consumer advocates.

"Our biggest concern though, is that the Florida Public Service Commission continues to fail consumers,'' Smith said. "The only way this bill actually works is if the Public Service Commission works."