Customers will pay $140 million next year so Progress Energy Florida can buy electricity from other sources while a nuclear plant remains shut down for repairs.
Consumer advocates opposed the power replacement charge, which will take effect Jan. 1, but it won unanimous approval today from the five-member Florida Public Service Commission.
The panel's decision is a prelude to a determination next year whether a portion of the repair costs should be passed on to customers or paid in full by the company's investors owing to problems that have delayed the work. The Crystal River plant was closed for repairs in 2009 but now isn't expected to reopen until 2014. That's about three years later than initially expected.
The repair bill is expected to total $2.5 billion. The utility wants customers to pay $670 million, or about a quarter of that amount.
The 2012 purchased power charge works out to $3.88 per 1,000 kilowatt hours, which is about average, monthly residential consumption. That's six cents more than residential customers now pay for purchased power since the plan was closed for repairs in 2009.
Consumer advocates say it's premature to pass that cost on to customers before the commission determines if the company's decisions related to the repairs were prudent.
That won't happen until after the panel holds hearings next June. They will focus on whether cracks that occurred in a reactor containment wall during the repair were the result of negligence by the St. Petersburg-based utility.
"The commission basically presumed that the utility is going to win the case next year, and we think that if it's any presumption it should be in favor of the rate payer," said Public Counsel J.R. Kelly, the state's consumer advocate.
Kelly said he and other consumer advocates expect to make a strong case against Progress Energy.
In a letter last week to state lawmakers, utility president and CEO Vincent Dolan denied the company was to blame for the "delamination" — cracking or separation — of the concrete wall when workers cut a hole in it while making repairs.
"Independent analysis later determined that the delamination could have neither been predicted nor prevented," Dolan wrote. He dismissed arguments to the contrary as "unsubstantiated claims, allegations and misinformation."
In defense of their purchased power decision, commissioners said the company would have to make refunds if it loses the prudence case. They also said if Progress wins that case and they had reduced or postponed the 2012 charge, customers would have been "shocked" by much higher rates in 2013 and 2014.
"I'm concerned about rate shock, and not rate shock right now, but rate shock in the future," said Commissioner Julie Brown.
Commissioner Ronald Brise said it may be "slightly painful for some right now," but that "it will be a whole lot more painful in the future."
The panel also was worried about how delaying the charge or approving just half of it, another option, might have affected the utility's cash flow and Wall Street bond rating.
"I would have been a lot more comfortable with the decision if we had heard more about the concerns people on Main Street are going to have with this," said Jon Moyle Jr., a lawyer for the Florida Industrial Power Users Group.
Also arrayed against the purchased power charge were the Florida Retail Federation and U.S. military bases that buy power from the utility that serves 1.6 million homes, business and other customers in central and north Florida.
The purchased power charge is one of several elements of each customer's power bill. The commission also recently approved other charges in fees for nuclear power plant construction and upgrades, fuel, and environmental compliance.
The combined effect, including the purchased power charge, will increase the 1,000 kilowatt hour bill by $3.85 TO $123.19 in January.