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By Eileen O’Grady
HOUSTON, Oct 15 (Reuters) - The Florida Public Service Commission on Friday agreed to let the state’s two largest utilities collect more than $270 million from ratepayers next year as a down payment to develop new nuclear plants expected to come online in the next decade.
The commission will allow FPL Group’s (FPL.N) Florida Power & Light Co to recover nearly $62.7 million in costs related to construction of two proposed nuclear reactors, Turkey Point Units 6 and 7, and work to increase output at its existing nuclear units, Turkey Point Units 3 and 4 and St. Lucie Units 1 and 2, the commission said in a release. FPL is the state’s largest utility with 4.5 million customers.
The commission also voted to allow Progress Energy Florida PGN.N to recover about $207 million in costs tied to construction of new nuclear units, Levy Units 1 and 2, along with an expansion at its existing Crystal River reactor. Progress, the state’s second-largest utility, has 1.6 million customers in Florida.
Utilities traditionally do not recover costs from customers for new power plants until facilities begin operation, but due to the regulatory risk and years of lead time to build nuclear plants, utilities across the country have sought permission to charge customers some costs during development to reduce overall financing costs and avoid large rate increases when plants come online.
“Nuclear power provides fuel diversity and will save Florida residents money on future utility bills,” PSC Chairman Matthew M. Carter II said in a release.
In 2006, Florida lawmakers enacted a law to encourage development of nuclear power by permitting cost recovery for some nuclear project costs ahead of construction. The law protects utilities by allowing them to keep money they have collected even if the nuclear plants are never built.
Commissioner Nancy Argenziano, a nuclear supporter and former state legislator, expressed some frustration with the nuclear cost-recovery statute, citing complaints from older citizens that the law forces them to pay for nuclear power they will never use.
“What if you have this circumstance where you can not build,” said Argenziano. “The statute did not protect, at all, ratepayers,” said Argenziano. “I don’t know what I can do as a commissioner. My hands are tied.”
South Carolina and Georgia also allow utilities to charge customers for early nuclear costs while Missouri lawmakers rejected the idea.
The PSC action means FPL’s customers will pay about 67 cents per month on a 1,000-kilowatt-hour bill next year, down from the $2.27 monthly charge residential customers began paying this year.
For Progress Energy customers, the 2010 charge will be $5.86 per month, the PSC said. Earlier this year, Progress cut its nuclear charge to $3.62 per month from $11.42, due to the slowing economy.
FPL plans to spend $12 billion to $18 billion to add 2,614 megawatts of new nuclear base load generation to its system, enough energy to power 1.4 million homes.
Progress Energy plans to spend more than $17 billion to add 2,380 MWs of new nuclear base load generation, enough energy to power 1.3 million homes. (Editing by Christian Wiessner)