Guidelines tightened on nuclear advance fees for utilities

Herald/Times Tallahassee BureauMay 3, 2013 

In the short term, Duke Energy can keep collecting the "advance fee" money already approved for the Levy County nuclear plant.

But, in the future, it will get a little harder for the utility, and others such as Florida Power & Light, to charge customers more.

The Florida Senate voted 40-0 Thursday to give final approval to a bill with tougher guidelines for use of the advance fee. Senate Bill 1472 now goes to the governor.

An hour before the unanimous decision, the Florida Supreme Court rejected a challenge over the fee and said the future of the advance fee law belonged in the hands of the Legislature.

"Today is kind of a mixed day for us," said Stephen Smith, executive director of the Southern Alliance for Clean Energy, which brought the Supreme Court challenge and led efforts to repeal the advance fee law.

"We are disappointed that the court did not exercise more authority," Smith said. But "the Florida Legislature moved a modest bill that is addressing some of our concerns."

SB 1472 states that if a utility cannot demonstrate it plans to complete the construction of the nuclear plant, it will no longer be allowed to collect money. The utility has 10 years after receiving its federal license to begin construction or lose access to the fee.

It must also prove the plant is economically "feasible" and "reasonable" to continue moving forward with the projects. Existing law required only that plants be "feasible."

Questions abound whether Duke Energy's Levy project remains reasonable at a projected $24.7 billion -- the most expensive nuclear plant in U.S. history.

Duke responded with a similarly bittersweet review of Thursday's legislative and court decisions.

"Duke Energy agrees with the decision today by the Florida Supreme Court which confirms that the 2006 nuclear cost recovery statute is constitutional and further confirms there are appropriate standards in place for the Public Service Commission to apply the statute," said Sterling Ivey, a Duke spokesman.

"Additionally, our position on (the legislation) has not changed," Ivey said. "We remain opposed to the bill, even as amended and passed. The process in current law is working and additional legislation or state requirements are not needed, which was confirmed today by the Florida Supreme Court."

The law in question is the Nuclear Cost Recovery Clause, referred to as the "advance fee" for reactor projects that the state enacted in 2006 as a way to hasten construction of new nuclear plants.

The state's two largest utilities, Duke and Florida Power & Light, propose to build two new reactors each but have not committed to do so. Still the utilities have been collecting hundreds of millions of dollars from consumers in advance for the projects without any requirement to refund the money if the plants are never built.

Duke customers already are paying $1.5 billion toward the Levy project, and the utility pockets about $150 million whether the plant i built or not.

Duke is collecting $3.45 per 1,000 kilowatt hours of usage each month from its customers this year and will continue to do so through 2017, as approved in an agreement with the state.

The utility also spent hundreds of millions increasing the power at the now shuttered Crystal River nuclear plant and still wants customers to foot the bill for the expenses, though they'll never get a kilowatt for it.

FPL spokesman Mark Bubriski said the utility opposes changes to the law because it believes the law has resulted in major savings to utility customers already by using the fee to add 500 megawatts of power to existing nuclear plants.

"It is fortunate for Floridians that the Legislature rejected anti-nuclear activists' short-sighted efforts to repeal the law," he said. "...We still have serious concerns regarding its impacts."

Having completed its upgrades, FPL recently asked the PSC to reduce the amount it seeks each year from customers for nuclear projects. If adopted, the 1,000-kwh residential rate will drop from the current $1.65 a month to 30 cents a month beginning in January.

But the biggest dispute is over Duke and FPL's proposed use of the fee for new reactors that neither one has committed to build.

The Southern Alliance said because Duke and FPL are not committed to building the new plants, they should not be allowed to collect money in advance.

The Supreme Court disagreed.

"We note, however, that the PSC ... addressed at great length the continued feasibility of the nuclear power plants at issue," the court said in its ruling issued Thursday.

In a 21-page opinion, the court concluded the concerns of the Southern Alliance for Clean Energy amount "to a policy consideration best addressed by the Legislature, not this court."

Jerry Paul of the Energy Information Center, a coalition of nuclear engineers, commended the Supreme Court ruling.

"I think that's good for ratepayers who won't have to pay increased charges on the pre-construction of power plants by people who want zero-emission electric supply," Paul said.

State Rep. Dwight Dudley, a St. Petersburg Democrat who filed legislation to repeal the nuclear fee, said the court decision was not unexpected and believes it returns the focus to the Legislature.

"There's a clear message here," he said. "It's not how they spend the money; it's how they take the money. It's taxation without representation when we have a CEO from a corporation take from us."

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