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PSC, Progress Energy Hammer Out Rate Agreement
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In what one member described as an "unprecedented" settlement, the state Public Service Commission approved a plan Wednesday that will resolve big-money questions about Progress Energy Florida's base electric rates and two controversial nuclear projects.
Progress customers will see their monthly electric bills go up in 2013, though they also will receive $288 million in refunds related to a repair project at a Crystal River nuclear plant.
The agreement also will lock in the amount customers will pay over five years for a proposed nuclear plant in Levy County. Supporters of the deal say those costs could have gone up far more if the settlement had not been reached.
"This may not be the best deal for all, but each party gets a little something,'' Commissioner Eduardo Balbis said before the PSC voted unanimously to approve the agreement.
Progress and representatives of consumers, business groups and federal agencies announced the settlement last month after lengthy negotiations. The announcement came as the St. Petersburg-based utility and the other groups prepared for a year of major -- and controversial -- regulatory issues.
Bottom line: Residential customers who use 1,000 kilowatt hours of electricity a month would see their bills go from the current $123.19 to an estimated $128.12 next year, according to information presented by the PSC staff. The utility industry uses 1,000 kilowatt hours as a common measurement, though many residential customers use more electricity than that each month and business customers are billed differently.
Progress planned early this year to file a proposed increase in base electric rates, which cover many of the day-to-day expenses of running the utility. Such base-rate cases take months, require expert testimony and often delve into issues ranging from company profits to staffing levels.
The settlement will allow Progress to raise base electric rates by $150 million but will short-circuit the need for a rate case.
More controversial, however, is part of the settlement that will allow Progress to collect $350 million from customers over a five-year period for a plan to build two nuclear reactors in Levy County. That would translate into $3.45 a month for residential customers who use 1,000 kilowatt hours a month.
A 2006 state law allows Progress to pass along nuclear-related costs to customers, though the Levy County reactors will not start operating for at least another decade, if ever. During a hearing Monday, the Southern Alliance for Clean Energy criticized the continuing nuclear costs, questioning whether the project will end up being built.
Progress, however, had been expected to propose passing along a larger tab to customers for the Levy project during the next few years. The settlement likely will delay construction of the multibillion-dollar reactors, though Balbis said he was concerned delays could hurt the viability of the project.
The other highest-profile issue in the settlement stems from a repair project at a Crystal River nuclear plant that critics accuse Progress of bungling. The issue involves a chain of events that started in 2009 when the plant was damaged during the replacement of a steam generator.
Last year, more damage was found as the plant was being prepared to operate again. That has led to questions about how -- or if -- the plant should be repaired and how the project will be financed.
The settlement, in part, calls for Progress to refund $288 million in "replacement power costs,'' which relate to Progress's need to buy or generate electricity elsewhere to make up for lost production at the idled plant.
But the utility also will get benefits from the Crystal River portion of the settlement. As an example, if Progress starts repairs by Dec. 31, attorneys for consumers and business groups could not challenge the decision to repair the plant and the construction method.
Suzanne Grant, a Progress spokeswoman, said the agreement will lead to the utility collaborating with the state Office of Public Counsel, which represents consumers, as decisions are made about the Crystal River project.
Supporters say a major advantage of the settlement is that it will provide "certainty" for the utility and customers in dealing with what otherwise could be tumultuous issues.
"I think the stipulation gets us to a point where there is predictability for our constituents,'' PSC Chairman Ronald Brise said.
Progress customers will see their monthly electric bills go up in 2013, though they also will receive $288 million in refunds related to a repair project at a Crystal River nuclear plant.
The agreement also will lock in the amount customers will pay over five years for a proposed nuclear plant in Levy County. Supporters of the deal say those costs could have gone up far more if the settlement had not been reached.
"This may not be the best deal for all, but each party gets a little something,'' Commissioner Eduardo Balbis said before the PSC voted unanimously to approve the agreement.
Progress and representatives of consumers, business groups and federal agencies announced the settlement last month after lengthy negotiations. The announcement came as the St. Petersburg-based utility and the other groups prepared for a year of major -- and controversial -- regulatory issues.
Bottom line: Residential customers who use 1,000 kilowatt hours of electricity a month would see their bills go from the current $123.19 to an estimated $128.12 next year, according to information presented by the PSC staff. The utility industry uses 1,000 kilowatt hours as a common measurement, though many residential customers use more electricity than that each month and business customers are billed differently.
Progress planned early this year to file a proposed increase in base electric rates, which cover many of the day-to-day expenses of running the utility. Such base-rate cases take months, require expert testimony and often delve into issues ranging from company profits to staffing levels.
The settlement will allow Progress to raise base electric rates by $150 million but will short-circuit the need for a rate case.
More controversial, however, is part of the settlement that will allow Progress to collect $350 million from customers over a five-year period for a plan to build two nuclear reactors in Levy County. That would translate into $3.45 a month for residential customers who use 1,000 kilowatt hours a month.
A 2006 state law allows Progress to pass along nuclear-related costs to customers, though the Levy County reactors will not start operating for at least another decade, if ever. During a hearing Monday, the Southern Alliance for Clean Energy criticized the continuing nuclear costs, questioning whether the project will end up being built.
Progress, however, had been expected to propose passing along a larger tab to customers for the Levy project during the next few years. The settlement likely will delay construction of the multibillion-dollar reactors, though Balbis said he was concerned delays could hurt the viability of the project.
The other highest-profile issue in the settlement stems from a repair project at a Crystal River nuclear plant that critics accuse Progress of bungling. The issue involves a chain of events that started in 2009 when the plant was damaged during the replacement of a steam generator.
Last year, more damage was found as the plant was being prepared to operate again. That has led to questions about how -- or if -- the plant should be repaired and how the project will be financed.
The settlement, in part, calls for Progress to refund $288 million in "replacement power costs,'' which relate to Progress's need to buy or generate electricity elsewhere to make up for lost production at the idled plant.
But the utility also will get benefits from the Crystal River portion of the settlement. As an example, if Progress starts repairs by Dec. 31, attorneys for consumers and business groups could not challenge the decision to repair the plant and the construction method.
Suzanne Grant, a Progress spokeswoman, said the agreement will lead to the utility collaborating with the state Office of Public Counsel, which represents consumers, as decisions are made about the Crystal River project.
Supporters say a major advantage of the settlement is that it will provide "certainty" for the utility and customers in dealing with what otherwise could be tumultuous issues.
"I think the stipulation gets us to a point where there is predictability for our constituents,'' PSC Chairman Ronald Brise said.
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