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Progress Energy Florida Agrees to Rate Settlement

BILL KACZOR, Associated Press
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File photo of elderly couple. (credit: Sean Gallup/Getty Images)

File photo of elderly couple. (credit: Sean Gallup/Getty Images)

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TALLAHASSEE, Fla. (AP) — Progress Energy Florida is asking state regulators to approve a settlement covering base rates and nuclear power replacement charges that includes a $288 million refund to customers.

The deal with the state’s Office of Public Counsel and other consumer advocates was announced Friday. It also provides for a $150 million annual base rate increase in 2013 if the Public Service Commission approves the agreement.

The net effect of the rate increase, refund and other provisions of the settlement would be to add $4.93 to the current average monthly residential bill, or 4 percent.

That figure, though, is subject to change if the commission approves modifications to fuel adjustment and other rates not covered by the settlement during the coming year.

“The agreement helps ensure the continued safe, reliable and environmentally sound operation of the electric system that serves more than 1.6 million Florida families and businesses,” said company president and CEO Vincent Dolan.

The St. Petersburg-based utility serves central and north Florida.

The refund would settle a dispute over charging customers for the cost of buying power from other sources during the shutdown of a nuclear plant.

Consumer advocates argued customers shouldn’t have to pay those expenses because Progress Energy was to blame for problems that have extended the shutdown. A reactor’s containment wall cracked during repairs at the Crystal River facility. The company denies that it was to blame, contending the cracking or separation of the concrete wall could not have been predicted or prevented.

The plant was closed for repairs in 2009 and now isn’t expected to resume operating until 2014. That’s about three years later than initially expected.

The five-member commission in November authorized Progress Energy to charge customers $140 million, or $3.88 a month for the average residential customer, for replacement power purchases during 2012 subject to refund pending final resolution of the dispute.

Another provision of the settlement would remove the shutdown reactor from the company’s base rate while the utility continues to analyze its options.

The commission had scheduled hearings later this year that could have led to passing on part of the repair costs to customers. They are expected to total $2.5 billion.

That proceeding would be halted if the commission approves the settlement, said Progress Energy spokesman Tim Leljedal. The company in the meantime will continue discussions with Nuclear Electric Insurance Ltd. on insurance coverage.

If the costs aren’t covered, the utility could again seek a pass on when the plant is restored to service and goes back into the rate base, Leljedal said.

The agreement also limits costs the company is allowed to charge customers through 2017 for a new nuclear plant planned for Levy County about 10 miles from the Crystal River plant.

Consumer advocates have opposed those charges, arguing it’s unfair for customers to pay planning and other preliminary costs for a facility that may never be built.

The plant, which would include two reactors, has drawn opposition from citizens who say it would upset the delicate balance of the rural area’s water system and present a health risk.

They voiced those worries at a hearing last week by the federal Nuclear Regulatory Commission in Crystal River. Supporters said the company has a good environmental track record and that the plant would improve the area’s meager tax base.

The Atomic Safety and Licensing Board, the commission’s judicial arm, is expected to hold a formal trial on a challenge to the utility’s license application as early as October.

Copyright 2012 The Associated Press.

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