SACE in the News: Challenging the Nuclear Tax at Florida Supreme Court

This blog was written by Jennifer Rennicks, former Senior Director of Policy & Communications at the Southern Alliance for Clean Energy.

Guest Blog | October 4, 2012 | Energy Policy, Nuclear

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

Arguments against the hugely controversial advance-payment “nuclear tax” law – under which millions of Florida consumers are saddled in advance with higher utility bills for nuclear reactors that may never come online and would only do so considerably over-budget and behind schedule – were heard today by the Florida State Supreme Court.

PEF 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. Numerous municipalities across Florida — including the cities of North and South Miami, Pinecrest, Biscayne Park, Yankeetown, Crestview as well as the Miami-Dade League of Cities and Broward League of Cities — have all passed resolutions opposing the nuclear cost recovery law.

Yesterday, the AARP Florida and a bipartisan group of elected officials (who all filed amicus briefs supporting SACE’s legal challenge) held a telepress conference urging the Florida Supreme Court to overturn the state’s widely criticized “nuclear tax” scheme (listen to the audio here).

Media coverage leading up to today’s arguments before the Court highlights the range of issues resulting from the advanced cost recovery law.

A recent article in the Tampa Bay Times, “Nuclear advance fee case in front of Florida Supreme Court has big implications,” pinpoints the unfairness to consumers in Florida having to pre-pay for nuclear plants that may never be built:

“Should you be forced to pay in advance for a product you may never get? And if you don’t get what you paid for, should you get a refund?

The Marcos Island Sun Times noted the hardships this nuclear tax imposes on older rate-payers in particular:

“Charles Milsted, associate state director of AARP Florida, said utility costs particularly hit low-income and older residents. Also, many current ratepayers might not ever get electricity from new nuclear plants, as Progress, for example, has said it would not go online in Levy County until 2024”

The Palm Beach Post focused on why a bipartisan coalition is seeking to repeal the advanced cost recovery law:

Democratic state Rep. Michelle Rehwinkel Vasilinda declared that, “Nuclear cost recovery is a hidden tax used by the utility companies to control our energy choices, eliminate competition and hold back the future,” while her Republican colleague, State Sen. Mike Fasano, said advance nuclear cost recovery was sold to the Florida Legislature with false construction promises and inaccurate fiscal projections.

Platts noted these Florida legislators said that if the Florida Supreme Court does not rule advanced cost recovery as unconstitutional, they will mount a new, more aggressive effort to repeal the law in the 2013 legislative session.

Though Fasano voted for the law in 2006, he since sponsored legislation (SB 740) to repeal nuclear cost recovery for new reactors during the construction and planning phase. Demonstrating bi-partisan support for a repeal, Rehwinkel-Vasilinda introduced a companion bill, HB 4031.

At the beginning of this year, Fasano detailed 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.

Earlier this week, SACE’s executive director Stephen Smith authored an opinion piece in the Palm Beach Post contrasting the risks of this financing scheme versus the benefits that lower-cost efficiency could have for customers:

This is a high-stakes game that should not be played with your money. FPL has received a virtual “blank check” while the governor remains silent and state legislative leaders refuse to repeal the nuclear tax. They are protecting a scheme that favors an increasingly expensive way to meet our energy needs while ignoring low-cost resources such as energy efficiency. Astonishingly, FPL concedes that is hasn’t actually decided to build the reactors, yet insists that consumers should cover the costs.

SACE remains committed to protecting utility ratepayers in Florida from the negative impacts of this nuclear tax scheme. Stay tuned for further developments and  consider taking action now to tell the PSC and the Legislature to Say NO to the Nuclear Tax!

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