Business

PSC Set to OK $337 Million Rate Hike For New Nuclear Plants, Upgrades

By: Kenric Ward | Posted: October 24, 2011 3:55 AM
Turkey Point Nuclear Power Plant

Turkey Point Nuclear Power Plant | Credit: nukeworker.com

Despite critics' cries of "nuclear socialism," the Florida Public Service Commission is expected to approve $337 million in utility rate hikes on Monday.

Florida Power & Light and Progress Energy are seeking "early cost recovery" increases to kick-start four proposed nuclear reactors on the east and west coasts. Under state law, utilities can seek rate hikes to cover planning, design and other preconstruction costs.

But opponents say customers may never benefit from the projects which, ultimately, may never be built.

"The state should not allow utilities to finance what will be a folly on the backs of ratepayers," said Pinecrest Mayor Cindy Lerner.

Mark Cooper, senior fellow for economic analysis at the Institute for Energy and the Environment at Vermont Law School, estimates that ratepayers will shell out $3,000 in higher electric bills before plant construction could even begin.

"[Consumers] won't break even until after 30 years, assuming there are no cost overruns or additional rate increases. This is nuclear socialism," asserted Cooper, who has submitted expert testimony to the PSC on the cost recovery issue.

Because multibillion-dollar nuclear plants have been difficult, if not impossible, to finance on the open market, Florida's two largest investor-owned utilities received legislative relief in the form of "early cost recovery" at the PSC.

It is widely expected that the commission will approve a preconstruction funding package of $196 million for FPL for two new plants at Turkey Point south of Miami and $141 million for Progress Energy's proposed reactors in Levy County.

Both utilities say they intend to pursue licensing with the U.S. Nuclear Regulatory Commission. But neither company has formally declared an "intent to build" the plants.

Jamie Whitlock, legal counsel for the Southern Alliance for Clean Energy, said the utilities' "option-creation" approach does not commit them to construction.

If the plants are not built, the companies nevertheless keep their "early cost recovery" rate increases and the shareholders retain the value, with interest, of any services and materials purchased with those funds.

South Miami Mayor Philip Stoddard called the arrangement "a funding scheme that is complete corporate welfare."

South Miami, Pinecrest, Biscayne Park and the Miami-Dade League of Cities have passed resolutions opposing early cost recovery. But efforts to strike down the five-year-old law have failed. State Rep. Michelle Rehwinkel Vasilinda, D-Tallahassee, has reintroduced a repeal bill for the 2012 session.

While Stoddard argues that consumers are being charged for unproven designs that will double electric bills in the short run, the utilities maintain that nuclear reactors are, in the long haul, far more cost-efficient than plants burning fossil fuels.

"They deliver long-term benefits to customers. Every year Levy is on line, it will reduce fuel costs by $1 billion a year. It's the only carbon-free program working 24/7," said Progress spokesman Tim Leljedal.

A Progress spokeswoman said the utility is "hoping for" PSC approval on Monday.

"Our intention is to go through the licensing process with the NRC. Once that's approved, we will review our options for moving forward," the spokeswoman said.

Progress estimates the price tag on its Levy County complex at $17 billion to $22 billion.

Noting that PSC staff has recommended approval of the cost recovery proposals, FPL spokesman Michael Waldron said funding for upgrades to the utility's existing plants "makes up about 90 percent of our request for 2012 nuclear cost recovery."

"For the typical residential customer, the total cost will be about $2 per month in 2012. Even with these costs, FPL’s monthly bills will remain the lowest of all electric utilities in the state," Waldron said.

 

Contact Kenric Ward at kward@sunshinestatenews.com or at (772) 801-5341.


Comments (7)

LDouglas
12:03PM OCT 24TH 2011
We should be holding out for the solution that comes up every morning- solar. If we have to collectively fund new sources of energy, we'd be better off funding rooftop solar for individuals to produce their own, rather than for corporations to produce it and sell it back to us.
Think of what it would do for our local economy if half of everyone's energy bill was left in their pocket to circulate locally rather than get sent out as operating costs and profits to sit in the bank accounts of people anywhere in the world.

http://www.grist.org/solar-power/2011-10-13-solar-getting-cheap-fast-ver...
Bryan K Donnelly
8:40AM OCT 24TH 2011
THANKS PSC, LONG OVERDUE!

Thank heaven for our current Florida government, pressing on with long overdue reforms in such areas as educational choice, public employee pensions, necessary budget cuts, and collective bargaining limitation. Our state has the best governor and legislature in living memory. Once the Obama Depression ends after the 2012 election and we get a national administration committed to real economic growth and energy production, our state will be in a position to boom.

NOW the Public Service Commission has the audacity to take another long awaited action; see to it that we’ll have plentiful REAL energy via nuclear power. I say REAL energy, that derived from oil, natural gas, and nuclear, as opposed to FANTASY energy schemes based on utterly economically non-viable and immature “technologies” like solar or wind “power.” We’ve been wasting time and billions of dollars perusing the “green energy” fantasy; all designed to “fix” the fantasy non-problem of anthropogenic (human caused) “global warming,” Time to get real.

Florida desperately needs more nuclear power plants and I, for one, would be happy were one to be placed in my community. They’re safer and cleaner than any other source of energy. They’d be less expensive too if we’d fix the problem posed by endless delays from “environmentalist” socialist-greenie groups and their lawyers. Now that we’re on the right track in planning more nuclear plants, it is time for the governor and legislature to address the crying need for comprehensive tort reform; get the “ambulance chasers” OUT of our businesses, medical care, AND energy industry. Florida needs legislation that will drastically shorten the nuclear plant approval process and limit eternal frivolous lawsuits. Let’s make ELECTRICITY not NEEDLESS LITIGATION.
Gerry
12:18PM OCT 24TH 2011
So, let me get this straight. You utter the party line, tea party rhetoric and then praise corporate socialism? You do understand that this IS socialism, except that there will be no revenue sharing, just cost sharing.

The one time the "no socialism" signs from tea party gatherings would be actually relevant and you take the wrong side of the issue. Someone's confused
Bryan K Donnelly
12:51PM OCT 24TH 2011
Power generation is NOT in any way "socialism ," except when the government does it, usually badly. Power companies have long been described as "natural monopolies" Their necessary generation and distribution infrastructure does not lend itslef to competition. That is why, necessarily, they are regulated. Even with THAT, they tend to get almost as bad as government; bureaucracy, lack of interest in consumers who, after all, have no place else to go.

Within that framework, the PSC has done exactly the right thing to insure that Florida has a plentiful supply of electric energy for our current and future needs. Wind and solar are absurd. Ask any electrical engineer who designs power grids; my brother does. They simply are not either reliable nor are they cost effective. Nuclear is the best form of power generation for the forseeable future, along with oil and natural gas.

Don't get the idea I'm happy with the current monopoly situation. It has been dictated by the available technology for a century. However, you'll be happy to know that there CAN be competition in electricity production. The great Margaret Thatcher, Briaain's best prime minister since Churchill, set up a competitive system in UK. It is working today. Only the power distribution system remains, necessarily, a monopoly. But there are competing power generating companies, insuring lower prices. We need to move in that direction here. AFTER we build many more nuclear power plants. Otherwise the greenies won't have any place to plug in their electric guitars at anti-nuclear protests.
LDouglas
11:56AM OCT 24TH 2011
Let's end all the upfront subsidies to energy production, and include ending the federal government backing the loans for constructing new nuclear plants like they backed the loans for Solyndra. As well as ending all the back door subsidies, and making energy companies include the hidden costs. Then we'll see what the corporations and the investors who fund them think is fantasy and which is real concerning energy production.

Oil and natural gas are finite resources and nuclear relies on a finite resource which will make them more expensive to run over time. Whereas solar, and perhaps wind will only get better and cheaper over time.
(Not to mention the large amounts of another finite resource used and polluted in either the extracting of oil and gas, and the mining of uranium- water.)

That where solar wian't say that about
JimHopf
3:46PM OCT 24TH 2011
The nuclear industry would be happy to accept such a challenge, i.e., to have such an energy policy.

Scientific studies which quantify the external (i.e., public health and environmental) costs of various energy sources show that nuclear's external costs are tiny compared to fossil fuels and similar to renewables. Like renewables nuclear emits no CO2.

www.externe.info/

Long term uranium supply is simply not an issue; the resource is essentially infinite. Uranium mining is one of the only tangible negative effects of nuclear, but its impacts are much smaller than that of coal mining.

Also, renewables are not benign in terms of resource extration needs/impacts. Solar and wind require over 20 times as much steel and concrete, and over 100 times as much land area (to be covered with industrial equipment) than nuclear does, per kW-hr generated.

In terms of subsidies, loan guarantees are nothing (small potatoes), compared to the massive direct subsidies that renewables get, along with outright mandates that they be used, regardless of cost or practicality (effectively, the largest subsidy of all).

Nuclear is among the least subsidized sources. Given that, and its low (real) external costs, nuclear would do very well under the objective, fair policy that you describe.
LDouglas
6:39PM OCT 24TH 2011
"Nuclear is among the least subsidized sources."

Mr. Hopf,
Not according to Wikipedia- though they may not have considered the mandates. However, other than mining the uranium, the problem I have with nuclear is the risk factors from natural disasters and potential acts of terrorism. Though, I also wonder what problems we'll face when the old ones need to be decommissioned. (Where does all that radioactive steel go?)

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