Questions raised about Progress Energy’s nuke plant settlement

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Jim Saunders of the News Service of Florida reports: An advocacy group raised questions Monday about a wide-ranging settlement agreement that includes Progress Energy Florida continuing to charge customers for a proposed Levy County nuclear-power project.

The Southern Alliance for Clean Energy, which said last month that it would challenge such nuclear charges in the Florida Supreme Court, declined to enter the settlement agreement announced Friday by Progress and consumer and business representatives.

Progress and the other parties are asking the Florida Public Service Commission for relatively quick approval of the agreement. In part, the settlement would allow Progress to collect $350 million from customers over five years for the Levy County project, refund $288 million related to a controversial nuclear-plant repair in Crystal River and increase base-electric rates by $150 million.

Stephen A. Smith, executive director of the Southern Alliance for Clean Energy, described the charges for the Levy County project and similar charges for Florida Power & Light projects as a “nuclear tax scam.”

Smith told reporters during a conference call that he welcomed the $288 million in refunds of what are known as replacement power costs, which stem from the shutdown at the Crystal River nuclear plant. But he also expressed concerns that the settlement nudges Progress toward bringing the troubled plant back online and running the risk of “throwing good money after bad.”

The Southern Alliance, which takes part in utility issues in Florida and four other states, held the conference call primarily to discuss its decision to challenge nuclear costs in the Supreme Court. Those costs have long been controversial because utility customers are paying for nuclear plants that won’t stop operating for another decade, if ever.

But the conference call also came three days after the Progress settlement agreement was announced. Just an hour before the Southern Alliance call, top Progress executives held another call with Wall Street analysts to discuss the settlement, which had been in the works for months.

Vincent Dolan, president and chief-executive officer of the Florida subsidiary of North Carolina-based Progress Energy, said the settlement addresses three major issues looming for the company — the Levy nuclear project, the Crystal River repair project and a base-rate case that would have played out over months.

Progress officials say the settlement will give the company certainty about those issues, while also helping hold down customer costs. Bottom line, if the settlement is approved, a residential customer who uses 1,000 kilowatt hours of electricity a month would pay an additional $4.93 starting in 2013.

The Crystal River repairs were a key topic during the company’s conference call with Wall Street analysts. A containment building at the plant was first damaged in 2009 during a project to replace a steam generator.

Last year, as the plant was being prepared to operate again, a concrete separation was discovered in a different part of the containment building. That kept the plant shut down and led to questions about whether Progress mishandled the project — and whether costs should be passed on to customers.

The settlement’s $288 million in customer refunds represents money that has gone toward buying or generating other sources of power to replace the lost production at Crystal River.

Bill Johnson, chairman and chief executive officer of the parent Progress Energy, said during the conference call that the company will wait for more engineering work and a bidding process to determine how it will address the Crystal River plant.

If Progress starts repair work before the end of 2012, the other parties would not challenge the decision or the repair plans, according to the settlement. But it also remains possible that Progress will choose to retire the plant, instead of repair it.

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.