Dimissing critics' cries of "nuclear socialism," the Florida Public Service Commission approved $282 million in utility rate hikes on Monday.
Florida Power & Light and Progress Energy sought "early cost recovery" increases to kick-start four proposed nuclear reactors on the east and west coasts and upgrade existing plants. Under state law, utilities can seek rate hikes to cover planning, design and other preconstruction costs.
For FPL customers, the $196 million rate increase amounts to $2.20 per 1,000 kilowatt hours. The new rate will generate an anticipated $24 million in additional revenues for the utility next year alone.
As part of a rate mitigation plan submitted by Progress Energy, the utility's request was downsized from $141 million to $86 million. The increase is associated with construction of its proposed nuclear power plants in Levy County and adding capacity at its Crystal River facility, currently under repair.
The cost to Progress customers is estimated at $2.93 per 1,000 kilowatt hours.
Both sets of rate adjustments take effect in January.
In approving the hikes, the gubernatorially appointed PSC rejected the state consumer advocate's allegation that neither company was honest in its cost projections. Future Progress rate hikes will be considered at a later date, the commission ruled.
Opponents charge that customers may never benefit from the nuclear plants 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 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.
The commission on Monday approved a preconstruction funding package of $196 million for FPL for two new plants at Turkey Point south of Miami, as well as upgrades at the utility's existing plants at Turkey Point and St. Lucie County. Progress Energy's $86 million package covers the Levy County project and the Crystal River upgrade.
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.
Meanwhile, three FPL customers are challenging the constitutionality of the early cost recovery law in court. The utilities say those challenges are "devoid of merit."
While Stoddard argued 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, "Our intention is to go through the licensing process with the NRC. Once that's approved, we will review our options for moving forward."
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, FPLs 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.
