SACE Challenges Florida Nuclear Power Tax

In December of 2011, SACE filed an appeal with the Florida State Supreme Court challenging the Florida Public Service Commission’s (PSC) November 2011 decision regarding “nuclear cost recovery” for Progress Energy (PEF) and Florida Power & Light (FPL). The PSC approved a combined $282 million for those two utilities, bringing the total to more than a billion dollars in advanced cost recovery over the past three years for new nuclear power generation.

PEF has proposed two new reactors in Levy County, Florida with an estimated cost of $22.5 billion and FPL has proposed two additional reactors at their existing Turkey Point nuclear plant near Miami with an estimated cost approaching $20 billion. Currently both utilities admit that no final decision has been made on whether to actually build these new reactors. Municipalities across Florida, including South Miami, the Village of Pinecrest and the Miami-Dade League of Cities, among others – have all passed resolutions opposing the nuclear cost recovery law.

Last week SACE held a press conference (listen to the audio here), which included Mayor Cindy Lerner of the Village of Pinecrest, discussing our appeal and the recent proposed settlement by Progress over their troubled Crystal River 3 reactor uprate and includes terms related to the proposed Levy reactors that we consider a bad deal in the long-term for Progress customers and another example of why the nuclear cost recovery legislation needs to be repealed.

Media coverage of the nuclear cost recovery issue has highlighted that the unjust nuclear tax scam is increasingly opposed by citizens across  Florida. A recent article in the Miami Herald by Mary Ellen Klas, “Energy advocates: State nuclear cost recovery bill is unconstitutional,” pinpoints the unfairness of consumers in Florida having to pre-pay for nuclear plants that may never be built:

“State-sanctioned monopolies are using this nuclear-tax scam as an entitlement to extract money from consumers,” said Stephen A. Smith, executive director of the Southern Alliance for Clean Energy. “This a really bad deal for the consumers of Florida.”

The Miami Herald article also mentions that the politics of nuclear cost recovery are changing as well:

Sen. Mike Fasano, R-New Port Richey, said a settlement agreement reached on Friday between Progress Energy and state regulators was proof that the company had pulled back from its commitment to build a new nuclear power plant in Levy County. The company agreed to reduce how much it will charge customers for the proposed plant, refund $288 million related to a controversial nuclear-plant repair in Crystal River and increase base electric rates by $150 million a year.

“That tells you right there that the nuclear power plant in Levy will never be built,” Fasano said. “They should be honest with the ratepayers and with the Public Service Commission and refund the ratepayers their money.”

Though State Sen. Fasano voted for the nuclear cost recovery law in 2006, he has now sponsored SB 740, which would repeal nuclear cost recovery for new reactors during the construction and planning phase. Demonstrating bi-partisan support for a repeal, Democratic State Rep. Michelle Rehwinkel-Vasilinda has introduced a companion bill, HB 4031.

Fasano explains the rationale behind his opposition to nuclear cost recovery in an opinion piece in the Tampa Bay Times.

As a staunch advocate for consumers, I believe that protecting our citizens’ pocketbooks, particularly in these trying economic times, is of the utmost importance. In Florida, allowing utilities to recover the costs of a new power plant before the plant is placed in service and regardless of whether such a plant is ever even completed is unfair to consumers and bad public policy. Moreover, while it shifts the risk from private companies to ratepayers, utility shareholders still benefit from all the profits — in this case a guaranteed rate of return on their capital expenditures.

When I originally supported the advanced cost recovery, I never thought the Florida Public Service Commission would turn a blind eye to the high risks associated with such capital-intensive and complicated projects. I know that my fellow lawmakers did not intend to give utilities a blank check, but that is in essence what has happened.

Lee County Commissioner Ray Judah also has voiced his disapproval of the law in a guest post for SACE’s blog, stating:

“Here’s the kicker: Customers not only bear the project risk for utility shareholders, but the early cost recovery statute provides that if a utility abandons a reactor project, it can still recover all construction costs from ratepayers.”

The Palm Beach Post also picked up on our concerns with the bad state legislation that has allowed this nuclear tax scam to flourish in Florida:

“The legislature has created a sloppy law which is unconstitutional,” Smith said. “We are hoping the judicial branch will engage here and do what they are supposed to do.”

SACE remains committed to protecting utility ratepayers in Florida from the negative impacts of this nuclear tax scheme. Stay tuned for further developments.

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