Lawmakers may bar pre-charging for nuclear plants
By Fred Hiers
Progress Energy customers might not have to worry about helping to pay for the utility’s proposed nuclear power plant for the next couple of years.
Tallahassee lawmakers are considering two bills that would prevent Florida utilities from charging customers for construction of nuclear power plants in Levy County before the facilities are complete. A regulation created in 2006 allows utilities to obtain the interest-free money from customers rather than having to receive all of its funding from lenders.
The regulation, called "advanced cost recovery," also lets utilities off the hook if their nuclear plants are delayed or never completed because they don’t have to refund their customers’ money.
Progress Energy has 1.7 million customers in 35 Florida counties.
Progress Energy raised its rates $11.42 a month starting in January in advanced cost recovery but in February asked the Florida Public Service Commission to cancel the increase. The PSC board will meet next week on the utility’s request.
Rep. Peter Nehr, R-Tarpon Springs, and Sen. Mike Fasano, R-New Port Richey, say that isn’t enough because the utility could apply for a new round of increases again later.
Nehr and Fasano are both proposing bills that would put a hold on advanced cost recovery until 2011.
"(Utility customers) simply cannot afford (increases and) are upset that Progress Energy does not build the plants with shareholder money instead of getting advance payments from their customers," Nehr said.
Following Progress Energy’s rate hike last year to raise money for its proposed $17 billion Levy County nuclear plant, Nehr and Fasano wrote the utility in December opposing advanced cost recovery.
"We believe that being a private corporation it is inherently unfair of you to ask your customers, our constituents, to front the costs of a project that is not even guaranteed to be completed," both Nehr and Fasano wrote. "This should be the responsibility of your shareholders and other possible investment partners."
In a letter back to the two lawmakers, Progress Energy President and Chief Executive Officer Jeffrey Lyash said that without advanced cost recovery, the Levy County plant’s future would be in jeopardy.
Progress Energy spokeswoman Suzanne Grant said the problem is that Progress Energy doesn’t have the legal ability to securitize loans or sell bonds to raise the money for the plant. Lawmakers are working to change that, however, and looking to streamline the process for utilities to get loans.
Grant believes opposition to the advanced cost recovery is based on the struggling economy.
"I think what’s surprising is the economic downturn," she said. "I think that’s what people are reacting to."
She said despite Progress Energy’s cancellation of its $11.42 rate hike, the utility was still continuing with its Levy County plant using its own money. The hike would have generated about $400 million this year.
Public Service Commission member Nancy Argenziano said that when advanced cost recovery was approved three years ago, few lawmakers knew the economy would tank and that nuclear costs would soar. The company has 1.7 million Florida customers.
Argenziano voted for advanced cost recovery, which was part of an energy bill, when she was in the Florida Senate in 2006. But she said she never read that part of the bill and that most lawmakers weren’t familiar with that part of the proposed law, either.