Supreme Court scrutinizes law that has allowed the state’s largest utilities to pass along nuke costs

By on October 5, 2012

Florida Supreme Court justices Thursday appeared skeptical about arguments that they should reject a controversial law that has allowed the state’s largest utilities to pass along costs to customers for potential nuclear-power projects, reports Jim Saunders of the News Service of Florida.

Justices, questioning attorneys in a challenge filed by the Southern Alliance for Clean Energy, pointed to the Legislature’s decision in 2006 to pass the law and to the regulatory role of the Florida Public Service Commission in carrying out the details.

Justice R. Fred Lewis suggested that opponents were raising a “political question” about decisions made by lawmakers, while Justice Charles Canady asked whether the Southern Alliance for Clean Energy doesn’t want more nuclear power plants.

“You’re against any nuclear power project,” Canady asked Southern Alliance attorney Gary Davis. “Isn’t that your client’s position?”

At another time in the back-and-forth, Justice Barbara Pariente said the “court really can’t step into the shoes of becoming a super regulator.”

But the Southern Alliance contends that the law is unconstitutional because it gives too much decision-making authority to the PSC. In recent years, regulators have allowed Florida Power & Light and Progress Energy Florida to pass along hundreds of millions of dollars in nuclear-project costs to customers — with the controversy focused on FPL and Progress plans to build nuclear reactors in Miami-Dade and Levy counties that would not start generating electricity for another decade, if ever.

Davis said the constitutional question centers on part of the law that says utilities can collect “prudently incurred costs” for such projects. He said that has not provided an adequate standard for the commission to decide whether costs should be passed along to customers, adding that regulators are being asked to “gaze into a crystal ball every year.”

Brian Armstrong, an attorney for the South Florida city of Pinecrest, which has sided with the Southern Alliance, said the law didn’t say what should be “fair, just and reasonable” electric rates for the PSC to consider when making the decisions.

“They (lawmakers) left unbridled discretion to the commission,” Armstrong said.

The nuclear costs have become highly controversial, at least in part because there is no guarantee that FPL and Progress will build the planned reactors and because projected costs have risen. The utilities go before the PSC each year to get approval to collect money from customers for such expenses as engineering and licensing work.

While the controversy focuses on the potential new reactors, the utilities also have used substantial amounts of the money for projects to upgrade already-existing plants.

The Southern Alliance filed the legal challenge after the PSC late last year approved allowing the utilities to pass along about $282 million in nuclear-project costs to customers in 2012. The nuclear-project amounts fluctuate each year, as do the impacts on customers’ bills.

In the challenge, the Southern Alliance contended that FPL and Progress did not adequately show last year that they intended to build the new reactors, which should have prevented them from collecting the money from customers. The utilities, represented in the case by former Supreme Court justices Raoul Cantero and Stephen Grimes, disputed that argument.

Though justices appeared skeptical Thursday about rejecting the law, they also asked attorneys about the impact on ratepayers. Pariente, for example, asked if the Legislature created a “win-win” situation for utilities, which could collect upfront costs for several years and then decide to halt nuclear projects.

Others raised questions about the PSC’s analysis to make sure electric rates remain reasonable.

“When is it too high for a customer?” Justice James E.C. Perry asked.

Cantero, who represents FPL, argued that the nuclear projects will save money long term because they will reduce the need for utilities to buy fuels, such as natural gas, for other types of power plants. Also, PSC attorney Samantha Cibula pointed to the Legislature’s overall aim in the 2006 law, which was to provide incentives for utilities to undertake multibillion-dollar efforts to add more nuclear power.

“The Legislature made that policy determination that they want to encourage investment in nuclear plants,” Cibula said.

Davis, however, said the law doesn’t provide any “adult supervision.”

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