The Orlando Sentinel, Fla., Beth Kassab column
May 05, 2012 (Menafn - The Orlando Sentinel - McClatchy-Tribune Information Services via COMTEX) --Stop me if you've heard this one.
You and Progress Energy walk into a bar. Progress says it's going to order 24 billion worth of drinks, but they won't arrive until 2024. Oh, and you have to pick up the tab -- even if the server drops the tray and the drinks never arrive at all.
If you sense you are the punch line in this joke, you're right. And, yes, you have heard it before.
Twice before, actually.
Last week, Progress raised the projected cost of the new nuclear plant it wants to build in Levy County and delayed its expected completion date.
It was the third such cost increase in five years. The price jumped from 17 billion in 2008 to as high as 22 billion in 2011 and now up to 24 billion today. The company doesn't expect to start producing power at the plant until 2024, eight years later than it originally thought.
And it's possible the plant won't be built at all.
But Progress' customers are still paying for it each month. Expect an extra 3.45 a month on your bill next year all the way through 2017, if Progress gets its way. That's a total of 207 during the next five years, if you don't have a calculator handy.
The nuclear tax -- we might as well call it that since it's a mandatory fee sanctioned by state government -- is likely here to stay, though it's being challenged in court.
So how did we get to this point?
Utilities are regulated monopolies. Energy isn't like insurance or cellphone plans. You can't just shop around for a better deal. You're stuck with whatever provider serves your neighborhood, and for large swaths of Central Florida's suburbs, that's Progress Energy.
Back in 2006, new nuclear power was all the rage because of concerns about a potential federal carbon tax, the demands of an increasing population and volatile natural gas prices. Utilities persuaded the Legislature to pass a law (the nuclear tax) that would allow them to charge customers for nuclear plants in advance of the plants being built.
A couple of years later, we were in a full-blown recession, and political will shifted against any new taxes, including a carbon tax. Florida's population began stagnating, even declining, meaning the utilities didn't have as many new customers as they expected. And natural gas prices dropped as power companies tapped into more and more underground supplies. Right now it's cheaper to burn natural gas than coal.
Suddenly new nuclear plants, which are astronomically expensive to build, looked far less appealing.
But that didn't stop Progress from signing a 7.65 billion contract with Westinghouse Electric Co., which makes nuclear reactors, in early 2009.
So we're on the hook for that contract. Or presumably a hefty fee to get out of it since Progress recently negotiated to cancel the main construction contract.
And Progress Energy is one of the most expensive providers in the state.
If the rate increases Progress asked for last week are approved by state regulators, the average customer's bill could increase from 123.19 a month to about 128 based on 1,000 kilowatt hours. (That's 3.45 for the Levy plant and 1.64 for improvements to the broken down Crystal River nuclear plant, another mess entirely.)
Florida Power & Light's average monthly bill is 94.62. OUC's is 115. Kissimmee Utility Authority, a small provider in Osceola County, charges more than Progress, at 133.17.
It's possible that the stars will align again for nuclear. Progress insists Florida relies too heavily on natural gas. The company says it's hoping to get a license next year from the Nuclear Regulatory Commission to build the new Levy County reactors. And then it will re-evaluate its plans.
But if history is any guide, the cost will keep going up, and the date will continue to be pushed back. And if the plant is never built, customers aren't entitled to any refunds under the law.
The joke's on you.
bkassab@tribune.com or 407-420-5448
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