Florida Nuclear Rates Approved

Recently, the Florida Public Service Commission (PSC) has approved new nuclear cost recovery rates for the state's two major electric utilities. It increased the rates for one and reduced them for the other. Both changes are effective Jan. 1, 2010. The commission approved $62.7 million for FPL Group's (FPL - Analyst Report) Florida Power & Light Company and $207 million for Progress Energy Florida (PGN - Analyst Report).

As per the new rates, Florida Power customers will pay about 67 cents a month on a 1,000 kilowatt-hour bill the next year, down from the $2.27 in the beginning of this year. For Progress Energy customers, the 2010 charge will be $5.86 per month, an increase of about $1.55.

Utilities traditionally do not recover costs from customers for new power plants until facilities begin operating, but due to the regulatory risk and years of lead time to build nuclear plants, utilities across the country have sought permission to charge customers some costs during development to reduce overall financing costs and avoid large rate increases when the plants come online. The cost recovery law was passed in 2006 as an incentive to build more nuclear plants to reduce reliance on imported fuel and cut greenhouse gases that have been linked to climate change.

FPL Group plans to add new reactors to its existing Turkey Point complex in South Florida while Progress wants to build at a new site in North Florida's Levy County. Florida Power plans to spend $12 billion to $18 billion to add 2,614 megawatts (MW) of new nuclear base load generation to its system, enough energy to power 1.4 million homes. Progress Energy plans to spend more than $17 billion to add 2,380 MW of new nuclear base load generation, enough energy to power 1.3 million homes.

FPL Group is the state's largest utility with 4.5 million customers. Progress, the state's second-largest utility, has 1.6 million customers in Florida.

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