Fla. Utility Customers Pay Now For Future Power

Regulators in Florida recently gave two utilities permission to begin charging customers for nuclear plants that won't be completed for at least a decade. To encourage development of nuclear power, Florida allows utilities to charge customers upfront for the costs. Now there's a movement to rethink that policy.

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In Florida, there's growing pushback against utility users paying in advance for a source of power they can't get yet. State regulators are allowing two utilities to start charging customers for nuclear plants that don't exist, and may not exist for a decade. This upfront billing is aimed at encouraging utilities to develop nuclear power. NPR's Greg Allen has more from Miami.

GREG ALLEN, BYLINE: Florida Power and Light serves some 4 and a half million customers in South Florida but in its ads, brags about its plans to upgrade its system.

UNIDENTIFIED MAN: FPL is building something for the future, investing more than $2.5 billion a year to make its infrastructure stronger, smarter, cleaner to deliver energy even more efficiently.

ALLEN: FPL currently has four nuclear plants generating power for South Florida, and says it wants to build two more. Although they may not be completed for years, FPL customers are already paying for them. Under a law adopted several years ago, Florida allows utilities to bill rate payers for the cost of designing, permitting and building new nuclear plants.

Recently, state regulators approved requests by FPL and another utility, Progress Energy, to add more than $2 monthly to their customers' bills. It's called Nuclear Cost Recovery, making customers pay now for power they're not using, and for plants that may never be built. And it outrages the mayor of South Miami, Philip Stoddard.

MAYOR PHILIP STODDARD: This is anti-capitalism. This is corporate welfare at its worst.

ALLEN: Stoddard is also a biology professor at Florida International University. He once was a nuclear proponent. He now says he opposes expanding nuclear energy in South Florida, in part because of the way it's financed. Those fees amount to an interest-free loan for nuclear power plants, estimated to cost some $20 billion.

STODDARD: Who's going to loan that kind of money to a company with such a low chance of success? If you look at the nuclear industry over the past 30 years, it hasn't built any new nuclear plants. And that's because the costs have gone through the roof. So unless you have some entity willing to pay totally outrageous, unlimited costs for nuclear plants, they're not going to get built.

ALLEN: Florida Power and Light spokesman Mark Bubriski says for now, most of the money is being used to upgrade the utility's nuclear plants currently in operation. Even so, that's an investment financed not through bonds or by shareholders, but by rate payers, for energy they won't begin using for at least another two years. [POST-BROADCAST CORRECTION: Upgrades currently under way at FPL nuclear plants are not being financed by shareholders and investors, but by FPL. Customers pay just a portion of the total cost before the upgrades are complete.]

But Bubriski says it helps the company begin looking ahead to Florida's future energy needs.

MARK BUBRISKI: You know, a utility doesn't have the luxury of waiting until the day before our customers need power. You have to plan ahead.

ALLEN: In 2006, when Florida's legislature passed its nuclear financing law, it was at a time when nuclear power seemed poised for a comeback. Congress had just passed a law promising loan guarantees for new nuclear plants. But since then, things have changed.

With the recession, the demand for extra power capacity declined. New technology has made natural gas more affordable as fuel for power plants. Interest continues to grow in renewable energy, and there was the nuclear accident in Japan this year.

All reasons why Sara Barczak, of the Southern Alliance for Clean Energy, is skeptical the new Florida nuclear plants will ever be built.

SARA BARCZAK: We're going to see billions, probably, spent that consumers are having to pay for in advance. And no energy is ever going to be produced.

ALLEN: In Florida, there's at least one legislator who wishes he could take back his vote that set up the Nuclear Cost Recovery Program. State Senator Mike Fasano says he supports nuclear power, but feels he and other legislators were misled about what they were approving.

Five years ago, he says, Progress Energy told legislators the total bill for its two nuclear plants would be $4 billion, with a completion date by 2016. Today, the price tag is five times that, and completion is still at least a decade away.

STATE SENATOR MIKE FASANO: What I oppose and regret is putting in a provision that allows a private company that trades on the New York Stock Exchange, a multibillion-dollar company, to allow them to pass through the cost of building nuclear power plants.

ALLEN: Fasano, a Republican, has worked with Democratic colleagues to try to convince Florida's legislature to revisit its Nuclear Cost Recovery Program, so far without success. But meanwhile, he's been using Florida's experience to warn off other states, including Iowa, North Carolina and Missouri, which have been considering similar plans to help finance nuclear power.

Greg Allen, NPR News, Miami.

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Correction Nov. 9, 2011

We incorrectly said that the upgrades currently under way at Florida Power and Light's nuclear plants are not financed by shareholders and investors. In fact, they are financed by FPL. Customers pay just a portion of the total cost before the upgrades are complete.

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