Customers of Progress Energy Florida will see their monthly electric bills drop in 2013, after state regulators Tuesday finalized critical costs related to fuel and an idled Crystal River nuclear plant, reports Jim Saunders of the News Service of Florida.
Progress residential customers who use 1,000 kilowatt hours of electricity a month will see their bills drop from the current $123.19 to $116.06, according to the Florida Public Service Commission.
Florida utilities have been buoyed by relatively low costs of natural gas that fuels power plants. Such fuel costs are passed through to customers in their monthly bills, offering direct benefits when prices are low.
The Public Service Commission, however, couldn’t finalize Progress’ projected costs until it dealt with a complicated issue stemming from the Crystal River nuclear plant, which has been shut down since 2009 when cracks were found in a containment building wall. The plant was expected to start generating electricity again in 2011, but additional cracks were found, creating still-unresolved questions about whether the facility should be repaired or closed.
A key part of the Crystal River decision centers on how much money Progress can recover from an insurance policy on the plant. That includes how much money Progress will receive for what is known as “replacement power” — essentially power that it has to buy elsewhere to make up for the lost production at Crystal River.
Progress projected that it would receive $327.6 million from the insurance policy in 2013 to go toward replacement power costs. But the Florida Industrial Power Users Group, a business coalition that frequently intervenes in utility issues at the PSC, argued that the projection should be higher, which would have reduced the amounts of money Progress customers would have to pay.
FIPUG contended that the cracks at Crystal River should be considered two separate events for insurance purposes, which could increase the amount Progress would recover from the insurer, Nuclear Electric Insurance Ltd. But the PSC, with little discussion Tuesday, agreed with the utility’s $327.6 million projection.
In a written recommendation, PSC staff members said the insurer had only recognized one event at Crystal River and had not made a determination about whether to consider the 2011 discovery of cracks as a second event.
Customers’ monthly electric bills are made up of a series of costs, such as base rates, fuel charges and environmental-project costs. Fuel charges are the second-largest part of bills and change every year.
The PSC on Tuesday also approved a $246 million rate increase for Florida Power & Light that stems from upgrades at its nuclear plants in Miami-Dade and St. Lucie counties. The utility has been able to collect some costs during construction, but the rate increase is related to the upgrades going into service.
FPL’s overall bill amounts in 2013 have not been finalized because of a dispute about an ongoing base-rate case. But as an indication of how lower fuel costs affect customers’ bills, FPL expects residential bills to remain roughly flat in 2013 because fuel savings will offset higher base rates and the costs of the nuclear upgrades.