How florida created — and killed — a nuclear building spree like south carolina’s business 100 gas vs 10 ethanol


What they didn’t know was that they would have a different problem altogether, one that stemmed from a clause tucked deep inside the 160-page bill. It was the clause that would transform Florida’s energy sector, and it was mostly overlooked in Tallahassee as lawmakers prepared to vote.

The nuclear cost recovery clause, as it came to be known, would spur enormous interest in building new power plants and expanding reactors that were already producing power. That’s because the clause let utilities charge their customers for power plants before they produce a watt of electricity. This would lead to billions in utility spending, virtually all of which Florida electric customers will pay for.

This Florida experiment would launch a frenzy for nuclear power from Miami to South Carolina. It would also write the first chapter of a cautionary tale about the political power wielded by utilities, the financial risks of building nuclear power plants and the enormous costs they could leave electric customers with.

South Carolina was one of at least 11 states across the country in the past decade that followed Florida’s lead and rewrote the rules of how utilities pay for big projects. That set off a flurry of risky construction projects, from a Mississippi clean coal plant that doesn’t burn coal to South Carolina‘s scuttled V.C. Summer nuclear plant, which may never be finished.

In Florida, ratepayers got a reactor upgrade that went so poorly the plant was abandoned. They got expensive licenses to build two new plants that never broke ground. They got a few expanded reactors that went far over budget and ultimately only added the equivalent of a mid-sized power plant.

The question struck at the heart of what the nuclear clause did. It allowed power companies to charge for reactors long before they were finished. And if the projects didn’t come to fruition, they could keep charging, as long as state regulators decided the work was "prudent" at the time.

Attkisson, one of the bill’s sponsors, answered it with a shot of optimism that would echo in South Carolina and Georgia when those states approved similar provisions. Charging upfront for construction would make it cheaper to finance the projects, and it "flattens the cost of increases over time," he said, easing the shock of higher bills.

She liked parts of the bill, especially the idea of developing more solar power, but she couldn’t justify charging ratepayers in advance. Her district in West Palm Beach skewed elderly, she said, so she worried these folks might not live to see the benefits of the long-term projects they were paying for.

But they won’t break ground on new units at Turkey Point for at least four years, FPL says, if it decides to break ground at all. Customers will have paid $275 million for the power company to get a license to build a plant, even if they don’t see the results for decades — even if they don’t ever see the results.

The company proposed a rate hike in 2009 to cover a suite of investments — in nuclear power and in projects to prevent outages when storms blow through. In the throes of the recession and under pressure to keep rates low, Florida regulators said no.

FPL shot back by putting the brakes on the Turkey Point expansion, saying it would do only the minimum it could and still get a federal license. It decried a crumbling regulatory environment, and it said Florida was missing a shot at new jobs when it needed them badly.

"This decision was about politics, not economics, and unfortunately it comes at a time when our state urgently needs jobs and investment," Florida Power chief executive Lewis Hay told investors in early 2010. "The decision will likely increase customer costs and diminish reliability over the long term because the commission failed to recognize the true cost of providing reliable service to customers."

Utility executives heralded the expansion as a feat of engineering and construction. "Arguably one of the most challenging in the history of the industry," chief nuclear officer Mano Nazar called it when it was done. It took as many man-hours to complete as the Empire State Building.

But FPL was criticized for underestimating the project’s scope when it first proposed the work in 2008. Bill Jacobs, a consultant hired by Florida’s utility watchdog agency, said the power company hadn’t done enough engineering work to grasp its complexity. FPL declined to comment for this story.

"The costs resulting from this pattern of year-after-year cost increases, following unfounded claims that their estimates were ‘highly informed,’ should not fall solely on the ratepayers," Jacobs wrote in 2013, as construction was wrapping up.

By then, the work was done, and FPL was winning praise from others in the industry. The upgrade project won awards for "innovation" and "excellence" from a nuclear industry trade group that summer. The utility bragged that it was using less foreign oil and emitting less carbon.

A sea change in the utility business was beginning in the South, and Argenziano had voted for it without a clue. She couldn’t even remember the idea coming up on the Senate floor. Had she forgotten it, she wondered? Was she talking with a colleague when the rest of the Legislature hashed out a $6 billion proposal?

Argenziano never got a firm answer about who wrote the bill she voted for, but her questioning led her to believe that the language must have come from a utility lobby or a power company like FPL or Progress. Who else, she wondered, would have known enough about utility financing to write that law? Who else would care?

A spokeswoman for Duke Energy said Progress "participated in drafting the language as we do in many cases to ensure the final product is the best policy for our state, our customers and our company." FPL declined to comment. ‘Look to your state’

That’s the standard utilities now have to meet to start construction in earnest. It’s a higher bar — one the power companies would have to clear before reactors to go up in Levy County or on Turkey Point. The Legislature made that tweak in 2013.