Who is Right about Progress Energy's Rate Hike?

Power company wins, you lose By Scott Maxwell | Sentinel Columnist
February 1, 2009
Ticked off at the size of your latest power bill?
You have a right to be.

Progress Energy and its apologists may try to con you into thinking this 25 percent rate hike is the inevitable cost of diversifying energy sources and higher fuel costs.
They're wrong on both counts.
First of all, since state officials approved their rate increase last fall, many fuel costs have gone down. If Progress is paying less, so should customers. Considering the economy, that needs to be fixed sooner, rather than later.
But the other part of the increase -- the one designed to make you pay for nuclear energy that might be ready 10 years from now -- is the part that's so objectionable, it has watchdogs from both parties crying foul.
In fact, just about the only ones cheering are Progress Energy stockholders.
The company's stock jumped $2 a share the day after the rate hike was approved.
That' s what makes all this so appalling, says Republican state Sen. Mike Fasano, who hopes to roll back the costs. "We're not talking about a nonprofit electric co-op here," Fasano said. "This is a full-on for-profit company."
A company that posted a half-billion dollars worth of profits in 2007 and paid its CEO more than $4 million.
If this was a free-market issue, we could just say: Bully for them.
But with utilities, customers have no choice.
That's why state officials are supposed to look out for your interests. But legislators screwed up in 2006 when they told utility companies that they could charge the customers of today for services they might provide years from now.
First of all, there are other ways to provide energy, such as wind and solar. And we could all learn to use less.
But even if Progress wants to build $17 billion worth of nuclear plants, they're free to do so. They can expand their for-profit operation the same way most every other for-profit operation in America does -- with money from the investors who will benefit from it.
There is also the fairness issue. Why should customers today pay for a service they may never use? Can you imagine if your cable company starting jacking up your rate -- in exchange for extra channels in 2019?
Fasano says a growing number of his colleagues now know t hey "didn't realize the implications" of what they were doing in 2006.
Making mistakes is understandable. Letting them stand is not.
Lawmakers need to do the right thing and fix this. They need to look beyond the $460,000 Progress funneled into state campaign accounts last cycle -- and look out for the people they represent.
If you want to call your legislator, you can do so at 850-488-4371.
Scott Maxwell can be reached [email protected] 407-420-6141.

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Pay a little now - or pay big-time later

By Mike Thomas | Sentinel Columnist
February 1, 2009
I just paid Progress Energy an additional 11 percent to build nuclear power plants.
That's fine because I support nuclear energy. And this is the only way to get it.
I could go into detail about collapsing financial markets, regulatory uncertainties, interest rates, long construction times and so on. Instead I'll be simple:
Standard financing options for nuclear power are nonexistent. Progress Energy needs a revenue stream to attract investors and pay reasonable interest rates.
That is why we have a state law allowing Progress to start charging now for construction and financing. Other states that want nuclear power are doing likewise. Aside from Progress, utilities in only two other states -- Georgia and South Carolina -- have signed nuclear-construction contracts. Both have laws similar to ours.
Kill the assessments, and Progress kills the plants. Period. If you oppose nukes, that's a good thing.
But I favor a stable energy supply that cuts greenhouse-gas emissions. That is why Charlie Crist, our green governor, supports Progress.
Charlie has taken coal-fired plants off the table because of their heavy carbon emissions. That leaves only two options for baseline 24-7 power -- nuclear and natural gas, which also emits carbon.
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Natural gas is subject to wild price swings. Spikes in fossil-fuel prices last year are causing most of the 25 percent increase in your energy bill this month. Nuclear power is the only long-term cure.
OUC did the same math and is buying into the Progress plants.
America is getting more dependent on natural gas, whereas our reserves are limited. The world's major deposits are found in the same countries now holding us over an oil barrel. We are doomed to repeat history.
Without nukes, Progress Energy will use natural gas to produce more than half its energy by 2020. Imagine the bills when Progress has to spend a billion dollars more a year on fuel, with potential carbon taxes of $500 million more. Imagine the brownouts after a Gulf hurricane.
With nuclear, you pay a lot more on the front end. With natural gas, you pay a whole lot more on the back end.
Either way, Progress will make its profit.
Also, Progress plans to retire two coal plants when the nukes come online between 2016 and 2018.
No nuclear means they stay in operation, pumping out 5 million tons of carbon annually. All those polar bears treading water in the melting Arctic need help.
People bemoan how Florida is short-sighted. At last we are looking ahead.
So do this: Adjust your thermostat, get energy-savi ng light bulbs and knock 11 percent off your bill.
Mike Thomas can be reached at 407-420-5779 [email protected]