Fla. nuke cost recovery changes signed into law despite concerns

Monday, June 17, 2013 5:51 PM ET Exclusive
Fla. nuke cost recovery changes signed into law despite
concerns

By Matthew Bandyk

Florida Gov. Rick Scott on June 14 signed a bill putting new restrictions on the ability of state utilities to recover costs for new nuclear power plants,
despite objections from Duke Energy Florida Inc. and Florida Power & Light Co.

"We continue to believe the legislation is not required," a spokesman for the Duke Energy Corp. subsidiary said in an email June 17. Similarly, FPL, a
NextEra Energy Inc. subsidiary, has "serious concerns regarding [the bill's] impacts," according to spokesman Erik Hofmeyer.

"We opposed any changes to the law from the beginning," he said. "The law is working for our customers because nuclear power has already saved
Floridians billions of dollars and is also one of the reasons why our customers pay significantly less than the national average for power."

He declined to comment on the specific impacts, but the bill limits the ability of a utility to get the costs of building a new nuclear plant approved and
recovered through customer rates in several respects. Under the new state law, for example, a utility that has not received a license from the U.S.
Nuclear Regulatory Commission for a project may only recover costs associated with pursuing that license, not other project activity.

This provision and others will likely affect Duke's and FPL's proposals to build new plants in the state, if they go through with them. Duke has
proposed the Levy County project, expected by the NRC to be the next new reactor proposal it reviews for a license, and FPL has said it may build
new reactors at its Turkey Point plant. Both projects would not be completed for at least another decade.

In the utilities' most recent requests for cost recovery with the Florida Public Service Commission, filed before the law was changed, Duke asked
for about $106.1 million related to Levy County out of $174.6 million in total, while FPL asked for about $17 million for Turkey Point out of $28.3
million.

While the utilities explained that most of this spending went toward work on obtaining the NRC license, at least some of the spending appeared to fall
outside the more narrow parameters of the new law, creating a question mark for future requests. For example, FPL's filing said that "the Turkey
Point 6 & 7 costs FPL is requesting to recover are being spent to pay vendors and personnel working to obtain the federal, state and local licenses
and permits necessary for FPL to be able to construct and operate the new nuclear units."

But despite the potential for new limits on the utilities' spending on these projects, the bill as signed by the governor fell far short of what the
proponents of the legislation originally wanted. The bill previously would have set a deadline for utilities to begin construction on new plants and
would have eliminated any profit generated by payments for preconstruction if the plants end up being canceled.

These provisions were ultimately scaled back in the legislative process, and the Florida PSC was given more discretion over a deadline or the
treatment of a canceled project. For example, in the new law, a utility must begin construction of a plant within 10 years of receiving the NRC license,
but it can overcome this limitation by showing that it has met an "intent to build" standard. The interpretation of this standard is left up to the PSC,
according to a fact sheet from the Southern Alliance for Clean Energy, an environmental group that was one of the main supporters of changing the
cost recovery law.

In a June 17 statement, the group called the bill "modest" and recognized how much the extent of its impact rests in the hands of state regulators.
"We remain concerned, however, that the governor's appointments to the Public Service Commission continue to be captive agents of the large power
companies in Florida," Southern Alliance Executive Director Stephen Smith said in the statement. "This bill will not work if the Public Service
Commission does not work."

FPL praised the changes to the legislation. "It is fortunate for Floridians that the Legislature rejected anti-nuclear activists' short-sighted efforts to
repeal the [cost recovery] law," Hofmeyer said.