PSC denies nuclear reactor costs to FPL — for now

Without a required feasibility analysis to show that two new proposed nuclear reactors are a good deal for customers, Florida Power & Light Co. cannot collect costs incurred after 2016, the Florida Public Service Commission decided Tuesday.

PSC commissioners unanimously agreed with a staff recommendation that because FPL failed to submit a required financial analysis, costs incurred for the two reactors from Jan. 1, 2017 going forward cannot be collected through nuclear power-related fees customers pay.

Since 2009, Juno Beach-based FPL has sought an operating license from the U.S. Nuclear Regulatory Commission for the proposed 2,200-megawatt Turkey Point 6 and 7 reactors which could cost as much as $21.8 billion. They might never be built, or no sooner than 2031, at the same facility where FPL already has two operating reactors overlooking Biscayne Bay south of Miami.

Still, customers have already paid close to $282 million in costs associ-

ated with the two reactors. And FPL wanted permission to continue charging customers with an exemption from having to fifile a feasibility study.

The Southern Alliance for Clean Energy, the Offiffice of Public Counsel, the Florida Retail Federation and the Florida Industrial Power Users Group all urged the commission to deny FPL’s request for an exemption.

The PSC agreed, but the company can collect costs from customers if and when it does provide the required report as long as the report shows the project makes financial sense, the commission said. The utility could also seek to collect the costs some other way, such as through base rates.

“The Southern Alliance for Clean Energy is pleased with the Commission’s decision to support our customer-friendly recommendation, at least for this year, to stop throwing good customer money after bad for a reactor project that is effffffffffffectively dead ,” said Stephen A. Smith, SACE executive director. “This decision is a positive move in the right direction and we look forward to more in the future, but we are disappointed that the Commission left the door open for FPL to come back at a later date to seek additional costs from customers.”

Under a statute the Florida Legislature enacted in 2006, FPL and other utilities can collect certain costs during the licensing and pre-construction phase of nuclear projects. The law was designed to encourage the development of nuclear plants.

During two days of hearings in August, FPL offifficials testifified that the company has spent roughly $ 315 mil- lion toward the two reactors and that those costs could grow by another $ 90 million during the next fifive years.

However, commissioners said they could not ignore the requirement for an annual fifinancial analysis. FPL has not filed the report since 2015, and in 2016, the commission gave the utility a pass after FPL offifficials said they would fifile the report this year.

FPL then asked for another deferral, saying it wanted to pause the project, perhaps for fifive years or more after receiving the license. It anticipates the NRC will issue the license for two Westinghouse reactors in 2018.

Westinghouse, which fifiled for bankruptcy in March along with is parent company, Toshiba, was hired to build two AP -100 reactor sat the failed V.C. Summer nuclear project in South Carolina. Westinghouse has since exited the nuclear construction business.

Commissioners struggled with the decision, saying they believe in diversifying Florida’s electric generation mix because 65 percent of Florida’s electricity comes from natural gas- fifired power plants. There is nothing to preclude FPL from submitting the report next year.

“This is a hard issue. The whole country is watching the new fleet of nuclear deployment sto be constructed around the country ,” said Commission Chairman Julie Brown .“This particular issue is a big one for us.”

Brown said the commission has complied with the law, allowing cost recovery in advance of the reactors’ actual construction and that nuclear power has provided clean, reliable energy for decades.

“Whether the statute has worked out for customers is a question that everyone has. Whether Turkey Point

A9

6 and 7 are going to come online and are feasible, are practical, are realistic, are questions we as regulators have,” Brown said.

Without a feasibility study, it’s not possible to determine whether the two units make sense, Brown said.

Commissioner Donald Polmann said it needs to be made clear that FPL must operate within the PSC rules. The commission agreed, saying all utilities should be on notice that the feasibility study must be fifiled to request reimbursement from customers under the nuclear cost recovery clause.

Commissioner Gary Clark saidhe finds the state’ s dependence on natural gas alarming, and he would hate to see the millions spent on the reactors thus far go to waste. A license for the two reactors would be a valuable asset for FPL to have on its books.

Commissioners also agreed unanimously that it’s reasonable for FPL to continue to pursue the combined operating license.

SACE said Tuesday it has other concerns, including that FPL has never committed to a binding price for the reactors or to build them at all.

“F PL customers have already paid $300 million into the proposed Turkey Point expansion project that will almost certainly never be built. Two nuclear reactors of the same design in South Carolina were recently canceled after the projected cost soared to over $ 25 billion dollars,” Smith said.

The Commission approved recoveryof the utility’ s costs for 2015 and 2016 that included $46,978,739 for the Turkey Point project. Customers will be receiving a credit next year of $7,305,202.