FPL has a “great” nuclear reactor deal for you! Interested?

Hey FPL customers, your monopoly utility claims to have a “great” deal for you!          

The Art of the Steal

FPL plans to build 2 nuclear reactors, but it won’t commit to actually build them – it won’t even commit to a price tag. In fact, there is no construction company to build them now that Westinghouse has recently filed for bankruptcy. The reactor project is so speculative FPL can’t say whether it would even be a good deal for customers.  Yet, it wants to continue to pursue licenses for this risky project, rack up millions of dollars in costs and profit, and have you pay the final tab – regardless of whether the reactors ever get built. Are you in?

This deal is like a predatory credit card scheme where FPL gets to run up your charges for as long as it wants, then and at some future date, present you with a staggering bill. And ironically, you won’t have purchased anything since the speculative reactors will likely never be built – so no electricity will ever be produced. Wouldn’t you prefer a better offer? Unfortunately, you will be stuck with this one if the Florida Public Service Commission approves FPL’s request.

What you need to know

FPL, in a stunning display of “chutzpa” filed a petition in May with the Commission as part of the annual nuclear cost recovery clause docket, arguing that it’s “reasonable” for the Company to continue to pursue a construction and operating license for its proposed Turkey Point 6&7 reactors. Yet, it can’t prove the reactors are economically feasible – due to “uncertainty” in the industry. Under the Commission’s own rules, FPL has the burden to prove the reactors make economic sense for customers before it can get permission from the Commission to spend money on the reactor projects for later recovery from customers. Here’s what you need to know:

  • No analysis: FPL has not filed the required annual feasibility analysis for the Commission to determine if the proposal is a good deal for customers. Moreover, FPL won’t provide the Commission with future required feasibility studies as it obtains and maintains its license.
  • No builder: Westinghouse, the designer and builder of the AP-1000 reactor has filed for bankruptcy and declared that it’s out of the reactor construction business.
  • More costs: it’s not clear how much this request will ultimately cost customers, it will be $25 million, just for this year, and will likely add up to $100 million or more – it depends on when FPL decides to move forward or cancel the project and recover “preconstruction” costs from customers.
  • More profit: meanwhile, FPL shareholders will continue to earn a hefty profit on the customers’ bill balance.
  • More bleeding: customers have already sunk about $300 million into the project.
  • Enough is enough: a hearing is set at the Commission for August 15, 2017

The Florida legislature passed an early cost recovery law in 2006 that allows monopoly utilities, like FPL, to shift all the financial risk of building reactors from its shareholders on to its customers. If it meets certain conditions, the power company can recover all its preconstruction costs (such as pursuing licenses) from customers, and if it abandons construction of the project at any stage – it can recover costs, and a hefty profit, from its customers.  FPL is the state’s biggest power company and made a $1.7 billion profit last year.

More questions than answers

FPL asked for a waiver from the feasibility analysis in 2016, but after strong opposition from SACE and other parties, FPL withdrew its request and promised to provide a feasibility analysis this year. It didn’t provide the analysis this year either – which essentially requires the Commission to fly blind in this year’s proceeding. As such, the Commission must reject FPL’s request.

FPL’s reticence in providing a feasibility analysis should come as no surprise as the reactors were economically questionable in 2015 – based on FPL’s own assumptions. With changes in market and regulatory conditions, and now no builder for the reactors, testimony from the City of Miami concludes that in 2017 the reactors are clearly no longer feasible.  Similarly designed projects in Georgia and South Carolina should have been operating by now and may never be completed – the Vogtle reactors, for instance, are now more that $3 billion over budget and Georgia Power is scrambling to find a way to keep its project alive after the Westinghouse bankruptcy.

If FPL isn’t willing to stand by the economic feasibility of its own project, why should the Commission find it “reasonable” to saddle customers with more costs? No matter, FPL is putting forth a “creative” legal theory suggesting that since it’s not recovering its cost and profit now, it doesn’t have to comply with the required filing of a feasibility analysis. That’s just counter-intuitive and legally flawed.

FPL’s request would clearly be a great deal for FPL shareholders, but not so for its customers. FPL customers can file comments with the Commission on FPL’s request here. Expect the legal fireworks to fly at the August 15th nuclear cost recovery clause hearing and we’ll be there to fight for consumers. Stay tuned!

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