Progress Energy gets OK to pass on costs for buying power

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Jim Saunders of the News Service of Florida reports that state regulators Tuesday approved Progress Energy Florida’s controversial request to collect $140 million from customers next year to cover costs related to the idled Crystal River nuclear plant.

The money will pay for what is known as “replacement power,” which Progress has to get elsewhere while the Crystal River plant is shut down for massive repairs to a containment building.

Commissioners rejected arguments from consumer, business and military attorneys, who contended that Progress should not be able to pass along the costs in 2012 because of outstanding questions about whether the utility has mishandled the Crystal River project.

Commissioner Eduardo Balbis raised the possibility that Progress customers could see brownouts or blackouts if the utility didn’t buy replacement power.

Also, commissioners said they were concerned about possibly delaying collection of the money until after a determination is made about whether Progress has botched the Crystal River project. They said that could lead to customers getting hit with “rate shock” because the 2012 replacement-power costs might be added to other future costs.

“I hesitate to gamble with the ratepayers’ money,” Commissioner Julie Brown said.

But state Public Counsel J.R. Kelly, who represents consumers in utility issues, said he was disappointed in the PSC’s decision, which he said puts a burden on ratepayers.

“Our message was loud and clear: Let us keep the money in our pocket,” said Jon Moyle, an attorney for the Florida Industrial Power Users Group, which represents business that use large amounts of electricity.

The PSC decision was the final step in deciding how much Progress customers will pay next year for electricity. Each fall, utilities seek approval for a series of costs, such as power-plant fuel and environmental-compliance measures, that add up on customers’ monthly bill.

Bottom line, a Progress residential customer who uses 1,000 kilowatt hours of electricity a month in January will pay $123.19, up from the current $119.34. Utilities use 1,000 kilowatt hours as a measuring stick, though many residents use larger amounts of electricity. Electricity costs for businesses are calculated differently.

Also Tuesday, the PSC unanimously approved a $20 million increase in base rates for Florida Power & Light that stems from a project to upgrade nuclear-power plants in St. Lucie and Miami-Dade counties. The move, which drew little controversy, will cost residential customers 23 cents on a 1,000 kilowatt-hour monthly bill.

Progress’ request for replacement-power costs was an initial skirmish in what will be months of debate at the PSC about the Crystal River repairs. A hearing is scheduled for June 2012 to deal with at least some of the questions about Progress’ handling of the project.

“This is an extremely, extremely complicated, one-of-a-kind case,” Kelly said.

The nuclear plant was first damaged in 2009 during a project to replace a steam generator. Workers needed to create an opening in a containment building to allow the generator to be replaced, but the project caused a separation in part of the building’s concrete.

Early this year, as the plant was being prepared to operate again, another concrete separation was discovered in a different part of the containment building. That led to a decision to do a highly unusual repair project to remove and replace concrete in the building’s walls.

The plant is expected to be shut down until 2014, and questions remain about critical issues such as how much of the repair and replacement-power costs will be covered by insurance.

Along with facing PSC scrutiny, the project also is being closely watched by Wall Street analysts. The utility said this summer that the repairs are estimated to cost between $900 million and $1.3 billion.

“We remain committed to return the Crystal River nuclear plant to service, as it is our lowest-cost generation unit and provides carbon-free electricity to the more than 1.6 million families and businesses that depend on us,” company President and Chief Executive Officer Vincent Dolan said in a prepared statement after the PSC vote Tuesday.

But the request for $140 million in replacement-power costs drew opposition from a variety of interests. Among them: the Florida Retail Federation, PCS Phosphate and federal agencies such as military bases.

Sen. Mike Fasano, a New Port Richey Republican who is one of Progress’ most-outspoken critics, issued a statement Tuesday blasting the utility and the PSC.

“It is time that the PSC stand up for the customers and say enough is enough,” Fasano said. “Let big business carry its own weight.”

Peter Schorsch is the President of Extensive Enterprises and is the publisher of some of Florida’s most influential new media websites, including SaintPetersBlog.com, FloridaPolitics.com, ContextFlorida.com, and Sunburn, the morning read of what’s hot in Florida politics. SaintPetersBlog has for three years running been ranked by the Washington Post as the best state-based blog in Florida. In addition to his publishing efforts, Peter is a political consultant to several of the state’s largest governmental affairs and public relations firms. Peter lives in St. Petersburg with his wife, Michelle, and their daughter, Ella.