PSC to decide this week on Progress Energy settlement

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Pitching a massive settlement agreement Monday to the state Public Service Commission, attorneys for Progress Energy Florida, consumers and businesses came back to one word: Certainty, reports Jim Saunders of the News Service of Florida.

The agreement, in one swoop, would temporarily resolve big-dollar questions about Progress’ base electric rates and two controversial nuclear-power projects. Customers would receive $288 million in refunds from Progress but, overall, they would see increases in their monthly bills.

“No matter how you slice it, there was enormous uncertainty,” said James Brew, an attorney for PCS Phosphate, which has a 100,000-acre Hamilton County operation whose energy use he likened to a small city.

But environmentalists and a Pinellas County businesswoman told the commission they were not satisfied with the proposed settlement, which was announced last month. They particularly questioned parts of the agreement dealing with planned Levy County nuclear reactors and a troubled repair project at a Crystal River nuclear plant.

“My question to you is, who is looking out for me, the small business owner?” asked Mary Wilkerson, owner of an Indian Rocks Beach vacation rental business who said she pays 16 electric bills a month.

The Public Service Commission is expected to decide Wednesday whether to approve the settlement, which was negotiated by attorneys for Progress, the state’s Office of Public Counsel, PCS Phosphate, the Florida Retail Federation, the Florida Industrial Power Users Group and federal agencies.

In advance of that decision, commissioners held a public hearing Monday and also heard presentations from staff members and the parties to the agreement. Approval would temporarily defuse some of the biggest issues facing regulators.

The changes would start showing up in customers’ bills in 2013. As an example, residential customers who use 1,000 kilowatt hours a month would see their bills go from the current $123.19 to an estimated $128.12 next year, according to information presented by the PSC staff.

The settlement would allow Progress to collect $350 million from customers over a five-year period for the proposed Levy County nuclear project — an amount that translates to $3.45 a month for a residential customer who uses 1,000 kilowatt hours of electricity.

The Levy County reactors are highly controversial, in part because customers are paying toward a project that won’t start generating electricity for another decade, if ever. Without the settlement, attorneys said they think Progress customers would see far-larger increases in their bills in the coming years for the Levy County project.

But George Cavros, an attorney for the Southern Alliance for Clean Energy, said he thinks Progress is “strategically retreating” from ever building the Levy County reactors. He and other critics say it is unfair that customers continue having to pay for the project.

The settlement also addresses several issues related to a possibly unprecedented repair project at a Crystal River nuclear plant, including calling for Progress customers to receive $288 million in refunds. Those refunds would be for “replacement power costs,” which stem from Progress’ need to buy or generate electricity elsewhere to make up for lost production at Crystal River.

Progress has faced questions for much of the past year about whether it botched the Crystal River repair project. The 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.

Last year, as the plant was being prepared to operate again, another concrete separation was discovered in a different part of the containment building. That has touched off months of scrutiny into Progress’ handling of the project and questions about how — or even if — the plant should be repaired.

While Progress would agree to give refunds, the settlement also includes provisions that would benefit the company. For example, if Progress starts repairs by Dec. 31, attorneys for consumers and business groups could not challenge the decision to repair the plant and the method.

Cavros questioned whether parts of the settlement would lead to Progress making a rush decision about repairing the plant and whether the Public Service Commission would have enough oversight of the project.

But state Deputy Public Counsel Charles Rehwinkel said the settlement includes safeguards. Rehwinkel said his office, which represents consumers in utility cases, has hired experts and will be involved in at least quarterly meetings with Progress to monitor the project.

“We’re not going to rush anything,” Progress attorney Alexander Glenn said. “We are first and foremost going to do what is right.”

Another major piece of the agreement would allow Progress to raise base electric rates by $150 million. The company had been expected to file a base-rate case this year, which would have led to a potentially contentious and time-consuming examination of its operations.

Robert Scheffel Wright, an attorney for the Florida Retail Federation, described the proposal as a “comprehensive and unique settlement agreement.”

“Every party gave a little,” Wright said. “But every party will get a lot of value in this settlement in terms of certainty and knowing where we are going forward.”

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.