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The Associated Press August 10, 2011, 4:29PM ET

Florida PSC begins hearing on nuclear plant costs

A Florida Power & Light Co. lawyer told state regulators Wednesday that questions raised by consumer advocates could undermine Florida's push to expand the use of nuclear energy.

He made the comment at the beginning of a lengthy hearing on whether customers should be required to keep paying for reactor costs before reactors are built or upgraded.

The Public Service Commission's hearing on nuclear construction recovery charges for Florida's two largest power companies is expected to continue into next week with a decision set for late October.

Consumer advocates are questioning expenses being piled up by Florida Power & Light, which is a unit of NextEra Energy Inc., and Progress Energy Florida.

The state's Office of Public Counsel and a group of industrial power users are asking whether some of those projects will ever be completed, although consumers are paying for them now. They cite factors such as waning public support after an earthquake and tsunami crippled a nuclear plant in Japan and dropping prices that have made natural gas a less-expensive alternative.

As the hearing began, the commission denied an FPL request to strike testimony by an expert for the Office of Public Counsel, nuclear engineer William Jacobs. He will contend that FPL's decision to "fast track" upgrades at its Turkey Point and St. Lucie nuclear plants was imprudent and added millions to their cost.

"We will testify that fast tracking is a term of art that connotes far more than simple expediting," said Associate Public Counsel Joe McGlothlin.

FPL lawyer Bryan Anderson argued that allowing testimony now about a decision made four years ago to fast-track the work would amount to "double jeopardy."

"This creates exactly the kind of uncertainty that discourages investment in nuclear energy," Anderson said. "That harms us."

FPL, which serves about 4.5 million homes, businesses and other customers in South Florida and on the state's east coast, has asked the commission to approve $196 million in nuclear cost recovery for 2012.

That would raise the current 33-cent fee for 1,000 kilowatt hours, which is about average monthly use for a home, to $2.09. That's an increase of $1.76.

Progress, with 1.6 million customers in central and north Florida, is seeking $141.1 million after the commission approved the company's request to defer for a year $16 million for upgrades to its existing Crystal River nuclear plant. Most of the remaining 2012 request is for a new plant in Levy County.

That proposal would decrease Progress Energy's current monthly charge for 1,000 kilowatt hours by 87 cents to $4.66.

In papers filed with the commission, the Public Counsel's Office says it appears increasingly unlikely the Levy plant will be completed at all, much less by 2022 as projected.

Besides declining natural gas prices and the Japan disaster, the filing notes Progress seems to be de-emphasizing the Levy project in its staffing decisions and there's now little prospect of finding a joint owner to help pay the costs. The consumer advocates also pointed to the company's delay in providing information to the commission's staff and auditors.

The five-member panel is focusing first on FPL and will hear testimony later -- possibly not until next week -- on Progress.

FPL may have lost its request to strike Jacobs' testimony, but the commissioners expressed sympathy for the utility's argument. Anderson said it's unfair to question FPL's fast-tracking decision in 2007 for a ruling on the nuclear fee that's supposed to be based on the company's performance in 2009 and 2010.

The commissioners agreed to allow the testimony at the urging of their staff lawyers who said it would cover both time periods. They warned that striking it could be grounds for a court appeal. The PSC lawyers also noted FPL is free to rebut the testimony and that the commissioners still can decide how much, if any, weight to give it when they make their decision.

"Me playing lawyer, it's not a pretty thing," Chairman Art Graham told Deputy General Counsel Mary Anne Helton. "So what you're saying that's cleaner than just striking it and doing the testimony specifically on `09 and `10?"

"Recognizing that I am lawyer, yes sir, that's what I recommend," Helton said.

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