Large Electric Rate Hike Inspires Legislation

January 15, 2009

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By Carl Orth | The Suncoast News - Now that Progress Energy Florida customers have opened their first bill with a rate increase of nearly 25 percent, legislation is taking shape that might roll back part of the increase.

The utility balked at requests from state Sen. Mike Fasano, R-New Port Richey, and state Rep. Peter Nehr, R-Tarpon Springs, to suspend the portion of the rate hike to jump-start nuclear power projects.

The nuclear "advance recovery fee" added more than 11 percent to Progress Energy residential electric rates, on top of more than 13 percent extra to cover higher fuel costs. The total increase of 25 percent added $27.28 onto a bill for 1,000 kilowatt-hours for residents.

So a typical customer who used to pay $110.59 now will pay $137.87.

When people are struggling to make ends meet because of the recession, Fasano and Nehr objected to such a large jump in electric rates. Nuclear power plants might take the better part of a decade before they are ready to go online.

Last week, Nehr was telling constituents about a Time magazine article, "Nuclear's Comeback: Still No Energy Panacea."

"Sen. Fasano and I are still working on eliminating the advance recovery fee from Progress Energy that many of you will see in your next utility bill," Nehr wrote in an e-mail message.

"For those of you who do not know," Nehr added, "if you have Progress Energy (Florida), your bill will increase upward of 25 percent, with about half for the privilege of paying in advance for a nuclear power plant which will not produce any electricity for about 10 years."

Also last week, Fasano went ahead with a meeting with Nancy Argenziano, a commissioner with the Florida Public Service Commission.

"It was a very productive meeting," Greg Giordano, Fasano's chief legislative assistant, said of the meeting between Fasano and Argenziano, who served together in the Florida House.

Fasano is working on the bill to revoke or temporarily suspend the utility advance recovery fee, retroactive to Jan. 1. He intends to introduce the bill in time for the Florida Legislature's 2009 session which starts March 3.

Fasano and Argenziano looked at possible ways to spread out Progress Energy nuclear development costs. Issuing bonds to help pay for nuclear power projects was explored.

Fasano learned PSC guarantees Progress Energy Florida can earn a rate of return of 11.83 percent on its investments.

"They have shareholders that should be taking the risk here," Giordano said, summing up Fasano's viewpoint.

A few years ago, lawmakers authorized utilities to charge customers for the nuclear advance recovery fee, Giordano noted. But that decision had been based on much lower estimated costs provided by utilities. When Progress Energy Florida filed for the rate increase last fall, the nuclear power estimates had more than doubled, Fasano complained.

That might be the first question Fasano asks once the bill is presented to the Senate's communications, energy and public utilities committee. Fasano serves on that committee. He hopes to have Progress Energy executives testify at committee hearings.

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