Advertisement
  1. Business

Rate gouging gone wild: Who wins 2013's Sour Orange Award for sticking it to Floridians?

Duke Energy came in a close second for its rate hikes, in part to pay for shutting down its crippled Crystal River nuclear plant.
Published Dec. 14, 2013

Every year, the oafish actions of big business or government hurt Florida consumers. Think back to banks that fraudulently "robo-signed" home foreclosure papers. Or state-run Citizens Property Insurance dumping gobs of Florida policyholders.

But 2013 upped the ante in sticking it to Floridians. So much so that I decided to issue the annual Sour Orange Award for inflicting the most harm on Tampa Bay and Florida residents.

Two especially outrageous actions were finalists for the award. It was a tough choice.

The first travesty: the Biggert-Waters Act to "reform" those flood insurance premiums on older homes that have been subsidized for decades. Blindly approved by Congress and implemented this fall, the act is starting to rapidly jack up premiums and scare away home buyers. In just a few months, the act already threatens to disrupt and perhaps destroy portions of Florida's coastal and low-lying real estate markets, ruin home values and undermine a cornerstone of the state economy.

Competing against Biggert-Waters is Duke Energy's gouging Florida customers this year in a series of flubbed nuclear power projects in Florida. Many of Duke's actions came at the direct expense of its own (and increasingly unhappy) base of Florida customers. In February, Duke decided to shutter its one and only nuclear power plant, broken since 2009, in Crystal River north of Tampa. This past week, Duke said it will take the next 60 years and spend $1.2 billion just to decommission the plant, leaving decades of spent radioactive fuel stored on site and under guard.

In August, Duke finally canceled plans first unveiled more than six years earlier to build a nuclear power plant in Levy County.

Residents of much of Tampa Bay and west-central Florida were forced to fund some of these ill-fated Duke projects. Thanks to a terribly misguided 2006 law passed in Tallahassee, Duke has charged its own customers higher rates for years to pay for construction of a nuclear power plant in Florida that would not have even begun operating until the mid 2020s. Duke also doesn't need to return any money to its customers even now that its Levy plant is canceled.

The price tag for Levy and Crystal River for Florida customers to receive not 1 new kilowatt of electricity? About $3 billion.

• • •

So the Sour Orange Award comes down to this: Is hiking flood insurance rates or hiking Duke Energy rates more hazardous to Florida consumers?

It was close.

But 2013's Sour Orange Award goes to the Biggert-Waters Act.

The legislation was intended to replenish the nation's flood insurance program, a federal program driven into the red after the heavy claims from policyholders in the wake of Hurricanes Katrina in 2005 and Sandy in 2012. While the Biggert-Waters Act (named for former Rep. Judy Biggert, R-Ill., and current Rep. Maxine Waters, D-Calif.) meant well, the drastic increases in premiums about to hit some Florida homeowners with so little warning is just bad legislation.

Even Rep. Waters is scrambling to address what she now calls the "unintended consequences" of her own legislation.

Shame on Congress for passing such poorly considered lawmaking. Shame on Florida's own legislators, insurance experts, bankers and the state's vast real estate industry for being caught so off guard by the act's devastating effects. And shame, so far, on the weak-willed efforts by Congress and this state to fix, delay or at least phase in the draconian rate hikes starting to selectively hit coastal area homeowners.

Just ask recent Illinois transplants Aaron and Jonie Greenwood, whose annual flood premium on their Boca Ciega bayfront home in Seminole will rise from $4,300 to nearly $44,000 by next summer. That's one of the highest documented flood insurance premiums in Pinellas County.

In recent days, Tampa-based Homeowners Choice Insurance won approval to sell flood coverage to policyholders as part of its overall property coverage. More private insurers may follow. Some state legislators say they want to draft legislation to encourage private insurers to offer alternatives to the National Flood Insurance Program in Florida.

Questions still abound. How can a private market for flood insurance emerge in a state that, after nearly two decades, still can't support a robust private market for comprehensive property insurance?

It's troubling to watch Florida's political leaders respond so half-heartedly to the threat of flood insurance gone wild. When Mississippi this fall sued to halt rising flood insurance premiums, Florida Gov. Rick Scott, Attorney General Pam Bondi and Chief Financial Officer Jeff Atwater decided Florida would not join the lawsuit. Instead, the state filed a "friend of the court" brief supporting the Mississippi lawsuit.

That's about as influential as a baseball fan in the stands yelling encouragement to a pitcher on the mound.

So, kudos to the Biggert-Waters Act for nabbing this year's Sour Orange title.

• • •

Let's just not let Duke Energy off the hook as the close runnerup.

Despite the debacle of its failed nuclear program in Florida, Duke insists it remains committed to generating electricity via nuclear power plants. And Duke still blithely sells the notion that nuclear energy is getting a warm welcome in the U.S. market.

Last Tuesday, for example, Duke Nuclear president Dhiaa Jamil praised the virtues of nuclear power at an energy conference. He called nuclear "one of the main reasons why our rates are competitive and lower than national averages" and praised the "reliability of the fleet" of Duke's nuclear plants.

Forgive my bewilderment.

Come January, Duke Energy will charge Florida customers $125.29 per 1,000 kilowatt hours. For the same amount of electricity, neighboring Tampa Electric will charge $109.61 and Florida Power & Light's price will be just $100.01. Do those differences in rates make Duke Energy appear competitive in Florida?

Duke's single nuclear plant in Florida was broken in a botched repair project, and shut down permanently even before that plant reached its normal 40-year life-span. The proposed nuclear power plant in Levy is no longer on Duke's drawing board. Is that Duke's "reliable fleet" of nuclear energy in Florida?

At the same conference, Duke's nuclear chief also credited Florida as one of the power company's "most supportive states" for nuclear. At the same time, Jamil panned Ohio and Indiana — two states where Duke also supplies electricity — as very difficult and not nuclear-friendly.

I strongly doubt Duke ratepayers in Florida are "supportive" of nuclear power plants when construction costs they must help cover in advance make nuclear an absurdly expensive option.

While Florida's easily influenced Legislature seems "supportive" of Duke Energy's nuclear agenda, even that may be changing. A small but growing number of newly elected state legislators are determined to amend or, better yet, eliminate the 2006 state law that shifts the expense and risk of building nuclear plants to Florida customers and away from Duke shareholders.

No doubt, as the nation's largest power company, Duke Energy will use its political clout and campaign contributions to make sure the notorious 2006 law stays largely intact. Perhaps such influence peddling will give runner­up Duke the boost it needs to win next year's Sour Orange award.

Robert Trigaux can be reached at trigaux@tampabay.com.

ALSO IN THIS SECTION

  1. Ken Jones, CEO of Third Lake Capital, has sold WingHouse for $18 million to a Jacksonville restaurant company. [Times 2016]
    Tampa’s Third Like Capital now major shareholder in restaurant’s new owners.
  2. The Don CeSar Hotel is caught up in a lawsuit over liquid nitrogen being served and causing injuries at its restaurant. [Times (2011)]
    They say the other side has made inflammatory and misleading statements to the media.
  3. This Mobil Coast gas station at 16055 State Road 52 in Land O Lakes is one of 10 cited in a Florida Department of Environmental Protection lawsuit where inspectors said they found lapses in regularly required tests, maintenance, documentation or other oversight by Brandon-based Automated Petroleum and Energy or its related companies. On Wednesday, the company said the station had already been put back in compliance with state regulations. (Photo via Google street view) Google street view
    The Florida Department of Environmental Protection contends Automated Petroleum and Energy Company failed to do required maintenance or testing at 10 gas stations in the Tampa Bay area and beyond.
  4. FILE - In this July 31, 2019, file photo workers clean the outside facade of State Farm Stadium in Glendale, Ariz. On Wednesday, Oct. 16, the Federal Reserve releases its latest ‘Beige Book’ survey of economic conditions. ROSS D. FRANKLIN  |  AP
    “Persistent trade tensions and slower global growth” were weighing on the economy, the Federal Reserve reported.
  5. A South Florida developer plans a condo tower on the parking lot between the Northern Trust building, left, and the Hilton St. Petersburg Bayfront. SUSAN TAYLOR MARTIN  |  Susan Taylor Martin
    South Florida company plans a 35-story tower next to a Hilton hotel.
  6. Tech Data's headquarters in Clearwater. The company is one of the largest in the Tampa Bay area. TD AGENCY  |  Courtesy of Tech Data
    The Largo company’s stock price soared Wednesday following the report, which the news service based on information from “people familiar with the matter.”
  7. Yesterday• Business
    Col. Jennifer Crossman smiles as Boomer, a 5-year-old dog, sits in the passenger seat of her car during the firefighter challenge at MacDill Air Force Base in Tampa. [Times (2016)] Tampa Bay Times
    Uber customers can now be connected with willing animal chauffeurs — for a fee.
  8. An image from the web site of Realtor Michael Schaffer's real estate company. [Realty Resources] WWW.TAMPABAYHOMEREALTOR.COM/TEAM  |  Screen grab
    Michael Schaffer still has active listings
  9. Duke Energy Co. workers are competing in a line worker competition in Kansas this week. | [Courtesy of Duke Energy Florida] Duke Energy Florida
    Four Duke Energy Florida competitors are from Tampa Bay, as well as two coaches.
  10. Alexandra Toigo, 32 and Sabrina Pourghassem, 23, pose for a photo at Hofbrauhaus St. Petersburg holding their signature beer mugs during Oktoberfest 2018. "LUIS SANTANA  |  TIMES"  |  Tampa Bay Times
    The beer hall’s property owners filed a lawsuit saying the restaurant missed its rent starting in August.
Advertisement
Advertisement
Advertisement