Florida Trying to Undo Nuclear Plant Financing

February 23, 2009

By MARGARET NEWKIRK - The Atlanta Journal-Constitution
As Georgia lawmakers push forward with a nuclear financing bill this week, their counterparts in Florida are scrambling to undo a similar measure approved three years ago.In the past two weeks, Florida Republicans, including the state Senate president pro tem, drafted two bills aimed at a 2006 law requiring power customers to pay early for new nuclear reactors.
The bills are a reaction to public outrage, after those nuclear fees had an unexpectedly expensive and politically disastrous debut this winter.
One power company's customers saw already spiking bills go up an extra 11 percent due to the nuclear fee.
The company backed down two weeks ago, suspending most of the fee for the rest of this year.
Florida is among several Southern states that Georgia Power and its legislative backers have pointed to as reason to pass Senate Bill 31 in Georgia, which would allow early collection of financing charges for new nuclear reactors.
The immediate 11 percent hike that hit Florida customers is larger than the 9 percent lawmakers believe SB 31 would gradually add to customer bills here.
And the 11 percent is also significantly larger than Florida lawmakers believed the nuclear fee would cost when they approved it three years earlier.
To SB 31's opponents, that surprise is the lesson of Florida.
"In general, what Florida confirms is what we already know," said Will Phillips, a lobbyist for AARP.
"Tying the hands of utility regulators, whether in Georgia or Florida, is bad public policy."
Georgia Power wants to build two additional reactors at its Vogtle nuclear plant near Augusta, with the reactors expected to go online in 2017.
SB 31 would let the utility begin collecting $1.6 billion in project financing charges six years earlier, when construction begins.
The charges include about $600,000 in debt interest and $1 billion in "return on equity" - roughly, profit - for Georgia Power shareholders.
The company says the early charges would protect its bond rating, hold down costs and ease reactor expenses into bills over six years, instead of adding them abruptly when the reactors are done.
Opponents say the measure would shift risk to ratepayers and tie up their money for years.
And they say the law isn't needed.
Georgia is one of 21 states that allow early financing for big projects like nuclear reactors. Most of those, including Georgia, require utility regulators to sign off, according to the most recent survey available.
SB 31 would strip the Georgia Public Service Commission of that authority.
Georgia Power and its legislative backers have offered a number of explanations for why that's a good thing.
Laws in other states are among them.
Southern states in particular have recently passed laws mandating early nuclear fees.
Georgia Power says a similar mandate here would help it compete with those states' utilities for construction capital.
The Southern states that have recently passed so-called "construction work in progress" financing laws have done so in variety of ways.
Mississippi's new law is much like Georgia's current one, according to regulators there.
Other states have limited regulators' role as proposed here. But they also provided incentives for other kinds of power.
Virginia provided equal incentives for renewable energy power plants, for instance. And North Carolina traded a limited version of early nuclear fees for a renewable energy mandate its utilities opposed.
Florida was among the first states to see its new law show up in customer bills: Virginia fees also hit this year, but for a much smaller, non-nuclear project.
Florida's law allowed early charges for more than finance costs.
Two bills are in play there now, both aimed at the nuclear fees.
One, by state Rep. Peter Nehr, a Republican, would expand the moratorium on nuclear fees.
Another, by Florida Sen. Pro Tem Mike Fasano, also a Republican, would allow that state's PSC to vote on alternative financing.
Georgia Power Comptroller Ann Daiss said that bill "is very similar to SB 31" in how it spreads costs out.
But the bill also appears to restore Florida utility regulators' ability to decide nuclear financing issues.
http://www.ajc.com/metro/content/metro/stories/2009/02/23/nuke_states.ht...