Court affirms utilities' cost recovery program

TALLAHASSEE, Fla. (AP) -- The Florida Supreme Court on Thursday unanimously upheld a state law that allows utilities to charge customers for future nuclear reactors — even if they never get built.

The court ruling came on the same day that the Florida Legislature passed a bill intended to decrease how much utilities could charge for nuclear power. The measure now heads to Gov. Rick Scott. Representatives from both Florida Power & Light Company and Duke Energy hailed the high court ruling and criticized the decision by state legislators to push ahead with the bill.

"The process in current law is working and additional legislation or state requirements are not needed, which was confirmed today by the Florida Supreme Court," said Sterling Ivey, a spokesman for Duke Energy, which was formerly Progress Energy.

The court battle came about after Southern Alliance for Clean Energy had appealed a final order of the Public Service Commission that allowed both FPL and Progress Energy Florida to charge customers for nuclear power plants that may never be built.

The alliance, an environmental advocacy group, asked the justices to declare the law an unconstitutional delegation of authority from the Legislature to the commission, which regulates the state's utilities.

The court ruled that the law wasn't unconstitutional and the commission's order wasn't arbitrary or unsupported by evidence.

"In so doing, we stress that it is not this court's function to substitute its judgment for that of the Legislature," the opinion said. Allowing utilities to charge for plants that may never be built "is a policy decision for the Legislature, not this court."

As if on cue, senators on Thursday voted unanimously on a bill (SB 1472) that tweaks the law in question, though the House previously removed a section that would have required refunds if utilities didn't follow through on plans to build nuclear power plants.

Sen. Jack Latvala, a Clearwater Republican, said he regretted that the refund provision was deleted from the bill, but "we have still made a significant step forward for the consumers of Florida."

The bill headed to Scott also requires state regulators to sign off on the preconstruction charges again after the utility reaches certain stages in the licensing and construction of the plant.

Rep. Mike Fasano, R-New Port Richey, sharply criticized the final bill since the refund portion was wiped out. He said it had been "hijacked" by Duke Energy.

"For the foreseeable future, power company customers will continue to pay for nuclear power plants that don't exist now and probably will never exist," Fasano said.

Expenses normally cannot be passed on to customers until power plants go into service, but the Legislature made an exception for nuclear reactors in the 2006 law. It was designed to encourage the expansion of nuclear energy.

The law lets commission members decide whether passing on the nuclear costs to customers is prudent and reasonable, but the alliance argued the standards leave regulators with "unbridled discretion."

Its lawyer had argued that utilities have been unwilling to spend their own money on nuclear projects, some of which have been plagued by cost overruns and delays.

Duke has been charging nuclear cost recovery fees for upgrades to an existing plant at Crystal River and a planned new one for nearby Levy County. But now Duke has decided to close the damaged Crystal River facility.

Duke stands to earn a $50 million profit on the $500 million that customers already have paid for the Crystal River plant. Customers also have paid $1.5 billion for the Levy plant. Duke could earn $150 million if that project is not built.

Latvala said the stricken refund provision in the bill would have ensured that utilities couldn't profit from a "bad decision" to drop a planned nuclear power plant project.

"The House saw fit to take that out of the bill over there, softened that up a little bit and I regret that," he said.

FPL spokesman Mark Bubriski said the cost recovery clause has allowed the utility to complete upgrades at two existing nuclear power plants. He said that the utility has just filed a request with state regulators to lower that cost recovery fee beginning in January.

"We continue to oppose changes to a law that is working for our customers because nuclear power has already saved Floridians billions of dollars and is also one of the reasons why our customers pay significantly less than the national average for power," Bubriski said. "Although this legislation will not affect our recently completed nuclear upgrades, we still have serious concerns regarding its impacts."

The Supreme Court case is Southern Alliance for Clean Energy v. Graham, No. SC11-2465.

Associated Press Writer Bruce Schreiner contributed to this story.

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