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Progress Energy Doesn't Budge On Rate Hike

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By Carl  Orth | The Suncoast News

Published: December 15, 2008

NEW PORT RICHEY - A stalemate has developed over a possible roll-back of part of a nearly 25 percent electricity rate increase for Progress Energy Florida before it goes into effect, in January.

Jeffrey J. Lyash, the utility's president and chief executive officer, basically stuck to his guns in a Dec. 15 letter to state Sen. Mike Fasano, R-New Port Richey, and state Rep. Peter Nehr, R-Tarpon Springs.

"Nuclear power is part of Progress Energy's balanced approach to meeting Florida's future energy needs," Lyash wrote in the letter to the lawmakers, who have criticized the rate increase.

If the utility doesn't voluntarily delay part of the rate increase, Fasano intends to move forward with legislation to suspend roughly 11 percent of the higher rates to help people socked by the recession.

The 11 percent of the increase would generate money Progress Energy officials say is needed in advance to help finance nuclear power projects the utility has plans to build within the next 10 years. The senator isn't challenging the 13 percent rate increase for higher fuel costs the utility says it must pay, especially for coal.

The Legislature authorized charging higher rates in advance for such projects as the nuclear plant the utility wants to build in Levy County, Lyash noted.

Fasano has complained the estimated costs for the nuclear plants have soared above the cost figures given to lawmakers 18 months ago. Lyash's letter doesn't address that point.

Lyash argues customers will save about $13 billion over the operating life of the nuclear plant. Once the Levy County facility goes into service, customers will save more than $1 billion a year in lower fuel costs. Less reliance on coal and other fossil fuels will help the environment as well, the utility CEO asserts.

Because of the recession, Fasano recently said, the utility should look to its investors or possibly sell bonds to finance nuclear power projects instead of asking ratepayers to fork over more money.

"He's extremely disappointed with Progress Energy's response," Greg Giordano, Fasano's chief legislative assistant, said Monday.

If Fasano's bill passes during the 2009 regular session of the Legislature, to be held this March and April, the law would be retroactive to Jan. 1. This would require Progress Energy to refund part of the higher rate to customers, Giordano explained.

Fasano's bill would suspend the advance nuclear power rate hike for two years.

Giordano likened the pending electric rate hike to a tax increase during a downturn in the economy.

"You just don't do that," he said. "It doesn't stimulate the economy."

More highlights of Lyash's letter include:

"We know that any price increase is unwelcome, particularly for those on low or fixed incomes.

"We take seriously our responsibility to minimize costs while continuing to provide dependable electricity to the households and businesses in Florida that depend on us. That responsibility means we must plan many years in advance."

Nuclear power, Lyash continued, is "critical to meeting the state's goals of becoming more energy independent, reducing the price volatility associated with fossil fuels and addressing global climate change."

Florida's progressive policies "allow for the recovery of certain costs of new nuclear plants while they are being built," mostly preconstruction and financing costs. Without the advance fees, "our Levy project could not have been initiated."

Progress Energy Florida has a "significant investment" in the Levy County nuclear project.

"Progress Energy shareholders, not customers, will shoulder the cost and risk associated with the licensing and construction of the project."

Lyash added: "Paying for the initial stages of any infrastructure improvement is challenging, particularly those phases of enhancements that are not readily visible. As you rightly point out, this challenge is even more difficult during the current economic times."

Lyash concluded that Progress Energy Florida officials will continue "constructive dialog with citizens and policymakers related to options that properly balance serious near-term concerns with long-term critical objectives."

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