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Progress Energy rate hike generates controversy

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BY CARL ORTH

SUNCOAST NEWS ASSISTANT EDITOR

Published: December 13, 2008

NEW PORT RICHEY - In November, Progress Energy Florida customers were shocked to learn they would be paying nearly 25 percent more on electric bills come January.
State lawmakers this week asked utility executives to reduce the rate increase to help cash-strapped customers during a recession.

State Sen. Mike Fasano and state Rep. Peter Nehr are asking nicely now. But if Progress Energy isn't cooperative, Fasano has hinted legislation might come next year to repeal the part of the rate hike for preconstruction costs of nuclear power plants.

Although sympathetic to the plight of customers, company officials say the money is vital to help pay for the two nuclear power projects. The company wants to avoid potentially even larger spikes in rates later and shift away from fossil fuels.

In January, the cost of 1,000 kilowatt hours is scheduled to go up by $27.28 to $137.87 under the new Progress Energy rates approved by state regulators.

About 13 percent of the increase would go toward higher fuel costs.

The other 11 percent for nuclear power preconstruction costs should be postponed indefinitely, Fasano and Nehr believe. They began jawboning on Monday to ask the company to lower the rate hike voluntarily.

That doesn't seem likely, according to the Progress Energy Florida prepared statement released Monday through company spokeswoman Suzanne Grant.

"We understand that any rate increase has an impact on our customers, especially during these difficult economic times," the company statement reads in part.

"Nuclear energy is necessary if Florida is going to significantly reduce greenhouse gas emissions.

At Progress Energy, we want to find the best way to invest in nuclear while minimizing costs to our customers.

"Florida law allows for recovery of certain pre-construction items for nuclear plants.

"Postponing the pre-construction costs until the plant is operational will increase the overall cost of the project and ultimately make electricity even more expensive for our customers.

"Florida residents are fortunate that their elected leaders recognize the importance of planning for the future.

"Unfortunately, there is no way to build power plants, roads, schools and other major regional and state projects overnight."

The door was left ajar to negotiations, though.

The statement said company officials "welcome the opportunity to talk to Sen. Fasano and Rep. Nehr about their ideas on the best ways to finance and build new nuclear plants that are needed for Florida's energy future."

"I ask Progress Energy to approach its shareholders and seek the funds they need from them rather than lay the burden on its customers," Fasano said Monday in his joint press release with Nehr.

Fasano wonders why the Progress Energy Florida estimates for the cost of the nuclear power projects have mushroomed, according to Greg Giordano, Fasano's chief legislative assistant.

"Progress Energy told the Legislature 18 months ago the cost of building nuclear plants would be about $9 billion to $10 billion," Giordano said Thursday.

So the lawmakers authorized the utility to collect preconstruction costs in advance.

The proposed nuclear plant in Levy County and the expansion of the utility's existing nuclear plant in Crystal River are still about 10 years away from being finished. There's a chance they might not be built at all.

"Now they are charging $17 billion without any explanation" to lawmakers for the dramatic inflation in costs for the nuclear power projects, Giordano said.

At press time, utility officials said they would need more time to research Giordano's question concerning the estimate costs of the projects.

Carl Orth can be reached at 727-815-1068 or corth@suncoastnews.com.

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