Florida hands utility companies blank check

Florida hands utility companies blank check Column

By

PIERRE TRISTAM|Florida Voices

Published: October 11, 2012
Updated: October 11, 2012 - 12:00 AM

Private investors aren't big on nuclear power. It's not cost-effective. That's why not a single new nuclear reactor has been built in the United States in three decades, despite generous federal loan guarantees and tax credits to utilities that shift much of the cost to taxpayers.

But in 2006, the Florida Legislature decided the rules of free enterprise don't apply to big utility companies. Investors may not want to risk their dollars on nukes, but ratepayers now don't have a choice. The Legislature changed the law to allow utility companies to charge customers years in advance for projected construction costs of nuclear power plants — whether those plants are built or not. Essentially, they gave the utility companies a blank check at ratepayers' expense.

Progress Energy and Florida Power & Light, two of the state's three largest utilities, took full advantage, claiming more than $1 billion for so-far imaginary projects. And they're looking for more this year.

FPL is spending some of the money on nuclear power plant maintenance. And the two utilities are allegedly setting aside money for new nuclear plants at Turkey Point near Miami and in Levy County. Still, every year, Progress and FPL appear before the Florida Public Service Commission to make a pitch for more money. All they have to do is show that projected costs are "prudent" and that they'll benefit future customers, though neither company has actually committed to building the plants.

On Thursday, the Florida Supreme Court heard arguments from the Tennessee-based Southern Alliance for Clean Energy, an environmental group, that the scheme be declared unconstitutional. The alliance is right, but not because it opposes nuclear power on principle. That's its weakest argument. It's right because Florida's so-called "cost-recovery" program is allowing utilities to shift all the risk from shareholders and onto customers, at a time when nuclear is among the least convincing energy option.

The numbers tell the story. In 2009, Progress Energy was proposing two nuclear reactors in Levy County for $3 billion each. This year, the projected cost is closer to $12 billion per reactor. At Turkey Point, FPL's proposed reactors would cost between $12.8 billion and $18.7 billion.

Is a more than $40-billion investment for just four reactors really Florida's best bet on 21st century energy?

Remember, the proposals were floated in the middle of the last decade, when Florida was booming and the nuclear power industry appeared to be emerging from its self-inflicted doghouse after the Three Mile Island and Chernobyl disasters.

This also was before:

• The Nuclear Regulatory Commission in 2009 declared Westinghouse's designs for FPL's and Progress Energy's reactors flawed and in need of redesign.

• The Fukushima nuclear disaster in Japan in March 2011 dimmed nuclear's promise again.

• The discoveries of enormous new reserves of natural gas on American territory.

• The collapse in natural gas prices, making that relatively cleaner fuel more attractive for electricity production.

• The Great Recession shrunk Florida's population projections and with them, the state's need for more energy.

Nuclear may still make some sense. But let companies bear the financial risks, especially since millions of people around the plants still assume the risk of accidents.

There should be no pre-pay plans, no vague, open-ended pledges to build these plants sometime in the distant future, when millions of current rate-payers won't be around to benefit from the improbably cheaper rates the utilities promise.

Ironically, FPL and Progress Energy recently made their own case against nukes. Since last year, FPL has been installing so-called "smart meters" on 3 million Florida homes and businesses. Progress Energy is installing them soon. The next-generation meters, the two companies claimed before the PSC last month in a workshop unrelated to the nuclear question, will make demand on the power grid more efficient and reduce the need for new power plants.

Great idea. FPL and Progress Energy should start by scrapping their vague and colossally expensive nuclear construction projects. If they don't, the Supreme Court should help them connect the dots, because ratepayers should not be held hostage to the utilities' nuclear power-hunger.

Pierre Tristam is editor and publisher of FlaglerLive.com, a non-profit news service based in Palm Coast.