Nuclear Plant Cost Recovery Under Fire

By George Edmonson

A coalition of consumer groups and activists is set for a legislative showdown with the utility industry and its supporters this spring over a Florida program to promote nuclear energy.

Since 2006, state law has allowed electric utilities to charge an additional fee for new nuclear power plants before they are operating, including those still on the drawing board. Critics—including AARP Florida—say the program allows companies to extract money from ratepayers even if a plant is never completed. Supporters say the program involves a small front-end investment by customers in exchange for big rate savings later.

The program has survived a state Supreme Court ruling and years of bipartisan legislative attempts to repeal it. Earlier this year, for the first time, some requirements were tightened by adding construction deadlines and increasing oversight. Opponents are gearing for another effort to repeal the program during the session that begins in March.

Political climate change
Critics argue that the political climate is shifting, particularly in the wake of Duke Energy’s August announcement that it was abandoning plans to build a nuclear power plant in Levy County after collecting about $1 billion in cost recovery fees from customers.

State Rep. Michelle Rehwinkel Vasilinda (D-Tallahassee) sponsored repeal legislation last session and has filed a similar bill for 2014. She’s convinced the chances of succeeding are “getting better every day.”

The focus now is on Florida Power & Light’s (FPL) use of cost recovery fees to help finance construction of two planned nuclear reactors near Miami capable of generating 2,200 megawatts of power. That’s about half the additional power FPL expects will be needed by the time the reactors go online in 2022 and 2023. The units are expected to cost $12 billion to $18 billion. FPL predicts they will save customers $78 billion in fuel costs over the reactors’ 40-year projected lifespan.

Repeal of the cost recovery program is an AARP Florida legislative goal. An AARP poll showed that 60 percent of Florida respondents 50 and older opposed the cost recovery program as explained by the pollsters.

Jack McRay, AARP Florida manager of advocacy, said utilities’ investors should finance the cost of proposed nuclear plants, not customers. Asking current customers to pay for possible future plants “is like charging today’s Sun Pass users an extra toll at each tollbooth for future highways that they may never drive on or may never be built,” he said.

AARP will email members early next year with information about the cost recovery bill and a Web link so they can urge their lawmakers to vote for repeal.

George Cavros, a Southern Alliance for Clean Energy attorney, said there is an “intergenerational disconnect” over the recovery program because many older people do not expect to enjoy the projected lower energy costs during the reactors’ lifetime.

Barry J. White, 75, a Miami-Dade County activist who is president and a founder of Citizens Allied for Safe Energy, said opposing FPL is “pretty tough.” With about 10,000 employees, the utility is politically active and powerful. From 2004 to 2012, FPL’s nearly $7.7 million in election-related contributions made it a top Florida spender, according to the National Institute on Money in State Politics.

FPL contends that the cost recovery program has been mischaracterized and its benefits ignored. “Nuclear cost recovery does not fund construction of the plants ... We’re saving customers money by paying off the interest charges that accrue,” said company spokesman Erik Hofmeyer.

"Nuclear energy generates electricity with minimal fuel costs and zero emissions, helping keep our air cleaner and our customers’ costs down," he said. "In fact, nuclear energy is one of the reasons why FPL’s typical residential customer pays about 25 percent less than the national average for electricity – important savings for Florida’s seniors and all of our customers."

Hofmeyer said the average FPL bill for its roughly 4.6 million residential customers has dropped about 13 percent since 2006, largely because of upgrades at its natural gas and nuclear facilities. In October, the Florida Public Service Commission approved FPL’s 2014 monthly cost recovery charges on an average residential customer bill at 46 cents, down from $1.65 in 2013.
George Edmonson is a writer living in Tarpon Springs