A Senate committee on Tuesday OK’d a bill amendment to provide for financing the shutdown of the Crystal River nuclear plant to save Duke Energy Florida customers more than $600 million.
SB 288 was a bill that primarily strengthened ethics requirements for the Florida Public Service Commission. But Sen. Jack Latvala, a Clearwater Republican and bill sponsor, requested a 30-page amendment to allow utilities to issue bonds to pay for shutting down nuclear plants.
The amendment grants the PSC authority to approve requests to issue bonds only for the premature closing of plants, Latvala told the Senate Committee on Communications, Energy and Public Utilities. He said Duke Energy requested the amendment.
The projected cost of the Crystal River plant decommissioning would be $1.3 billion under a settlement approved by the PSC in 2013, Latvala said. Duke Energy, he said, could collect a 7.5 percent rate from customers.
The amendment would allow Duke Energy to take advantage of current bond rates of 2.5 percent with a savings of $802 million for customers, or $600 million in present-day value, Latvala said.
He said he asked the Office of Public Counsel, the Division of Bond Finance and Senate committee staff to evaluate the proposal.
“I’ve tried to find the holes in it,” Latvala said. “I’ve tried to look for any problems, any tricks. I don’t think there’s any in the current language.”
Sen. Charlie Dean, a Republican from Inverness, questioned Latvala repeatedly about the proposal, including whether it applied to costs associated with plans for a nuclear plant in Levy County that Duke Energy has since scrapped.
Latvala said the proposed Levy County plant is completely separate from the Crystal River plant shutdown and the legislation.
Jon Moyle, representing the Florida Industrial Power Users Group, thanked Latvala for the amendment. He said, however, there should be a fixed rate for the refinancing to ensure that large power customers, like those Moyle’s group represents, will save money.
“The customer don’t want to have exposure to interest rate risk,” Moyle said.
Public Counsel J.R. Kelly said the proposal would save customers $600 million to $700 million in the net present value because of the reduction in the interest rate.
Duke Energy customers “will definitely see a savings from the securitization,” he said.
And Susan Glickman, Florida director of the Southern Alliance for Clean Energy, said she was concerned that the legislation provides an opening for other fees.
She called for stronger utility regulation and better planning “so we don’t come here cleaning up after previous bad decisions which is effectively what we’re having to do here today.”
The bill passed the committee unanimously and has one more committee stop. The committee had passed the bill in February but the bill returned for consideration of the amendment.
SB 288 also was amended to set a limit of three four-year terms for PSC members, matching language in the House bill, Latvala said.
The House version of the bill, HB 7109, is on the agenda for the House Regulatory Affairs Committee on Thursday. Latvala said he expects the House to consider an amendment to provide for the Crystal River shutdown financing.
Duke Energy spokesman Sterling Ivey said the deal would save customers $2 to $3 per month on 1,000 kilowatt-hours of electricity.
“We are continually looking at innovative ways to help reduce the cost of our service to our customers,” Ivey said. “This is one example of an innovative solution to accomplish this and we appreciate Senator Latvala’s leadership in proposing this legislation.”
Bruce Ritchie (@bruceritchie) covers environment, energy and growth management in Tallahassee.