Florida Power & Light got the go-ahead Monday to increase the average household electric bill to pay for investments in nuclear energy — even if the utility never ends up building any new nuclear power plants.
The charge, which will amount to $2.20 every month for a household using the average 1,000 kilowatt hours of electricity a month, was approved unanimously by the Public Service Commission, which regulates state utilities.
Under a state law approved by the Legislature in 2006, the company can collect the money for new nuclear plants without having to commit to building the plants. The commission approved the increase, arguing it was required to do so based on the statute.
“I find that the utility has done what the statute has asked for,’’ Commissioner Ron Brise said. He said it could hurt investment in the state if the PSC had decided not to give the utility what it expects. “We are implementing the statute as prescribed by the Legislature.”
The five-member commission accepted the arguments of FPL, which asked for $196 million in 2012 for cost recovery — $171 million for upgrading existing nuclear plants and the rest for planning two new reactors at Turkey Point.
FPL says its customers will benefit from the improvements because expanded nuclear power will offset the need to buy natural gas and other fuels. The utility said it plans to have its upgrades completed by 2013 and predicts customers will save $141 million in fuel costs the first year. It says that when it completes all its nuclear projects, the company will reduce greenhouse-gas emissions by an estimated 33 million tons over the lifetime of the plants.
“Our customers get good value for their money, and the reason we’re able to deliver this is because we’ve made long-term, cost-effective investments such as our nuclear projects for years,’’ said FPL spokesman Mark Bubriski. The nuclear cost recovery policy helps customers “experience real benefits today and have the clean, affordable power they need in the future.’’
But opponents, including the Office of Public Counsel, which represents consumers in the rate case, argued that the money is a bad deal for consumers because there is no guarantee that FPL will build the new plants despite spending money on planning, licensing and design. Green energy advocates also warn that the process locks customers into paying for expensive nuclear plants for decades when other, more efficient energy options may become available.
“It’s a sad day for Florida ratepayers’ wallets,’’ said Stephen A. Smith, director of the Southern Alliance for Clean Energy, a non-profit advocacy group. He said the law that allows companies to recover money for nuclear expenses before they incur the costs is “like free money for the utilities.’’
The 2006 law was approved as part of a larger energy-reform package that created a state energy commission, offered solar energy rebates and required the PSC to pass incentives to encourage renewable energy development in Florida. All of those provisions have since been either revised or dismantled by the Legislature, but the nuclear-cost provision, for which the utility industry lobbied heavily, remains.
Smith said the formula has been a successful one for the utilities, which for the past three years have been able to raise rates to pay for nuclear power planning. “Talk up a project, sell the idea to the Legislature and PSC, delay it multiple times, and keep vacuuming up ratepayers’ hard-earned dollars,” he said.
The commission also unanimously approved Progress Energy’s request to charge average customers $2.93 per month to build future nuclear power plants, despite troubles with its existing Crystal River plant, which is in need of an estimated $2.5 billion in repairs.
The decision will allow the company to collect $85 million towards a new nuclear power plant in Levy County and to expand its Crystal River facility at a cost to customers of about $2.93 per month per 1,000 kilowatt hours. Consumers now pay $5.53 per month per 1,000 kilowatt hours for those speculative projects.
Commissioner Julie Brown asked if the state law specifically requires a company to prove that it intends to build a plant. Staff lawyer Keino Young said the answer is yes, but noted that the company doesn’t have to definitely decide to build a nuclear plant in order to charge customers and collect money for it.
“Is it necessary that the final decision be made prior to allowing recovery? No,” Young said. If the company is engaged in siting, licensing or construction of a nuclear power plant, “they meet the intent requirement of your order.”
Commissioner Eduardo Balbis said he is comfortable with allowing the companies to charge customers so they can pursue the option of building a nuclear plant. He said he didn’t want to reverse the practice of the PSC for the past two years because “making an irrevocable decision at this time of a project of this magnitude may not be reasonable.’’
The PSC, whose members are appointed by the governor, makes its decision based on input from the utilities, from the state’s consumer advocate and from the PSC professional staff, now led by Braulio Baez of Miami, a former PSC commissioner who has worked as a lawyer for the last five years, often representing utility companies.
Meanwhile, the cities of Pinecrest and South Miami are leading an effort to repeal the legislation and have passed resolutions opposing the nuclear cost recovery policy.
“This is in fact the most amazing corporate welfare scheme I have ever seen in my lifetime. It’s really anti-capitalism,’’ said South Miami Mayor Phillip Stoddard. Because the cost-recovery funding makes it possible for utility companies to obtain Wall Street funding for nuclear technology in the wake of the Japanese disaster, he said, the policy has helped utility shareholders at the cost of consumers.
“Here, the users pay upfront, make the investment and yet somehow the shareholders end up getting the profits,” Stoddard said. “It’s really remarkable.”