Friday, December 29, 2017
Business

Florida PSC approves Duke Energy agreement with customers on hook for $3.2 billion

TALLAHASSEE — State regulators on Thursday approved a controversial settlement agreement over who pays for Duke Energy's $5 billion in nuclear failures.

The Public Service Commission's 4 to 1 vote officially puts Duke's customers on the hook for up to $3.2 billion of the costs related to the now shuttered Crystal River nuclear plant and the canceled Levy County project.

Insurance will cover $835 million of the expenses, and Duke shareholders will pick up the rest.

Commissioner Eduardo Balbis was the lone vote against the agreement. He favored additional inquiry, citing insufficient expert testimony and a paucity of public documents regarding the insurance matters. He also wanted to know more about Duke Energy's decision to retire, rather than repair, the broken Crystal River plant.

"We have plenty of time to thoroughly review the critical issues in this case," Balbis said. "I think it is important that we get this information."

His plea fell on deaf ears.

Commission chairman Ronald Brise said his parents are among Duke's 1.7 million customers, and he understands the concerns customers have about the spending. But he said he believes the agreement was a good deal.

"It is a difficult situation across the board," Brise concluded Thursday afternoon. "This is not what anyone would have liked. But this provides the best resolution."

Added Commissioner Julie Brown: "There are no compelling alternatives. I think this is an opportunity to stop the bleeding. With the public interest in the forefront … this is the best alternative that we have."

Commissioners Lisa Edgar and Art Graham also voted in favor of the settlement.

It was a complex case, often described as a tragedy so large that it could have taken years to resolve without the kind of settlement reached between Duke and the state Office of Public Counsel, which represents consumers before the PSC.

Deputy public counsel Charles Rehwinkel said Duke was poised to appeal his requests for more documents, which could have dragged the case on for years.

"There was a lot of uncertainty and unknowing," Rehwinkel said. "I'm not saying this settlement is something that we … celebrated and had champagne over."

Some consumers urged the PSC to delay a decision on the settlement to provide time to hold hearings in Duke's Central Florida service area so commissioners could hear from ratepayers themselves.

Commissioners rejected the request, saying the law did not allow them to take testimony in this kind of case other than from expert witnesses. The commission, however, allowed consumers who traveled to Tallahassee for the first day of settlement hearings on Wednesday to speak for three minutes each.

Commissioners also said budgetary constraints prevented them from making such a trip other than when a utility is requesting a rate increase. In those cases, the law allows consumers to talk to the commission about the quality of service their utility delivers.

The group "Stop Duke Rip-Off" sent an email to the PSC on Thursday offering donations it was receiving to help pay for the commissioners' trip to the community. The group had not immediately heard from the commission.

Rep. Dwight Dudley, D-St. Petersburg, said the PSC always seems to ignore the people in deference to the utilities, even with the decision to approve the settlement.

"In terms of being a watchdog for consumers, they have been absent," Dudley said. "If anything they've been a toothless lapdog.

"I don't see how they have benefited us, the public, in any way shape or form, which calls into question the value of the PSC in its current form," he said.

Duke's critics dubbed the Crystal River nuclear facility the "Humpty Dumpty" plant after cracks in the concrete led to its demise.

Duke spent hundreds of millions of dollars replacing the plant's old steam generators. The spending escalated after the utility cut into the 42-inch-thick concrete reactor containment building and it cracked.

Questions arose about why the utility decided to self manage the project, when every other utility that successfully completed similar upgrades had hired an outside contractor to oversee the work. Duke's plan for preparing and then cutting the wall also differed from the way it was done at other plants.

Attempts to repair the wall and bring the reactor back online led to more cracks. In February, Duke announced Crystal River's closure.

The upgrades, repairs and replacement power Duke was forced to purchase resulted in more than $3 billion in expenses.

At the same time, Duke was seeking a license to build two new reactors less than 10 miles north of the Crystal River plant in Levy County.

A law passed in 2006 enabled the utility to charge customers ahead of the plant coming online for siting, planning, development and financing charges. The "advance fee" or "pay-as-you-go" law shifted the risk of starting a nuclear project from investors to utility customers.

The initial price tag was $4 billion to $6 billion. It quickly escalated, eventually reaching more than $24 billion. Duke ended up spending about $1 billion and generated $300 million to $500 million in financing charges before scuttling the project earlier this year.

Dudley pointed to the so-called "advance fee" laws for nuclear as a major reason the costs got so out of control. The Legislature, Dudley said, needs to "sharpen the stake and drive it through the heart of the utilities when it comes to nuclear cost recovery."

Duke plans to try to sell components it purchased toward Levy to reduce customers' obligation, but it remains to be seen whether they'll find buyers.

Rehwinkel, the deputy public counsel, said a prime benefit of the settlement agreement is that the customers' tab for Levy can not rise any higher.

"The Levy project is dead," Rehwinkel said. "That was one of the things we thought was important — to exterminate the Levy project."

Sterling Ivey, a Duke spokesman, said the settlement provides long-term certainty and stabilizes rates for years.

"It is fair and represents a good value for our customers," Ivey said.

Customers will pay more, though. The average residential customer's monthly rate will increase by $8.24 on Jan. 1 to $124.30 per 1,000 kilowatt hours.

Expect even more charges to come.

As part of the settlement, Duke wants to pursue another as-yet-undisclosed power generating source to build or buy by 2017 and to build two natural gas plants in 2018 and 2020. They will have to prove that the extra power is needed before moving forward.

There also will be charges related to storage of the nuclear fuel left at the Crystal River site.

Ivan Penn can be reached at [email protected] or (727) 892-2332.

Comments
Duke, Tampa Electric file to hike rates following Hurricane Irma

Duke, Tampa Electric file to hike rates following Hurricane Irma

If local utilities have their way, monthly electric bills will go up $4 to $5 across Tampa Bay next spring, largely because of Hurricane Irma. Duke Energy Florida filed with regulators late Thursday for a $5.20 increase to cover $513 million in storm...
Updated: 12 hours ago
Airbnb visitors to Florida surge 75 percent in 2017

Airbnb visitors to Florida surge 75 percent in 2017

If its latest guest numbers are any indication, Airbnb is here to stay. The California-based hospitality giant counted 2.7 million guests in Florida this year, a whopping 75 percent increase over last year�s guest pool, Airbnb said. For the 40,000 Ai...
Published: 12/28/17
How to tell the difference between garbage and recycling (w/video)

How to tell the difference between garbage and recycling (w/video)

Before the holidays, I started thinking about plastic.And cardboard.And all that wrapping paper.It seemed like a good time to revisit an important topic � recycling.I thought I knew it all, since I�m so committed to it that I fish things out of the t...
Published: 12/28/17
The banker to Florida�s medical marijuana players is getting out of the business

The banker to Florida�s medical marijuana players is getting out of the business

When Florida�s medical marijuana industry was first starting out a few years ago, business owners faced a dilemma: Where could they find a bank to take their millions?For a marijuana distributor, opening a bank account isn�t as easy as it is for the ...
Published: 12/28/17
This is Tampa Bay's priciest foreclosure, and its history is as twisted as its boardwalk

This is Tampa Bay's priciest foreclosure, and its history is as twisted as its boardwalk

TIERRA VERDE — Behind a tall iron fence lies one of the most unusual gated communities in Tampa Bay. And within that lies the most expensive and unusual bank-owned house for sale between Crystal River and Sarasota. The community is called Gree...
Published: 12/28/17
Shelby�s Sugar Shop opens at Westshore plaza

Shelby�s Sugar Shop opens at Westshore plaza

TAMPA�WestShore Plaza gets a little sweeter with the opening of the new confectionery, Shelby�s Sugar Shop. Named after a fictional girl, Shelby, who travels from the rolling hills of the country to the heart of a big, bustling city, the shop will of...
Published: 12/28/17

Brazil ice cream brand comes to International Plaza

SOUTH TAMPA � Chiquinho Ice Cream, Brazil�s largest ice cream network, has come to AmericaChiquinho opened its first U.S. operation earlier this month in Tampa on the lower level of International Plaza and Bay Street mall in front of the Forever 21. ...
Published: 12/28/17
Pet owners line up at new Petsmart in Oldsmar

Pet owners line up at new Petsmart in Oldsmar

OLDSMAR�Dogs of all sizes and breeds lined up with their owners outside the new PetSmart in Oldsmar as they awaited the grand opening earlier this month.The store officially celebrated its new location on Dec. 2 with a ribbon cutting, giveaways, coup...
Published: 12/28/17
Noble Crust expands to Carrollwood

Noble Crust expands to Carrollwood

CARROLLWOOD � Area restaurant Noble Crust has opened its third location.Founded in 2014, Noble Crust first opened in St. Petersburg, and expanded to Wesley Chapel in July with a restaurant at The Shops at Wiregrass. Its Carrollwood location went onli...
Published: 12/28/17
Seminole Electric proposes $727M natural gas plant

Seminole Electric proposes $727M natural gas plant

Times staff and wiresState regulators will hear arguments in March on proposals for two new natural gas power plants in Putnam and Pasco counties that would supply electricity to customers of electric cooperatives throughout Florida.Filings last week...
Published: 12/27/17