Florida Politic

For nearly a decade, the Florida Legislature, the nuclear industry, and Florida’s Public Service Commission have colluded to force electricity customers to pre-pay for new nuclear plants and repairs to plants that should be shuttered. But rising costs, public outrage, and the exposure of industry con-games may be putting an end to it all. Their plans may have also been derailed by hijinks from the Progress Energy-Duke Energy of North Carolina merger. Nuclear power is too expensive for Florida and irreparable harm to the economy may be happening right now. We need to put the breaks on the nuclear power con-game being played out in Florida.

Problems with the PSC go back to the days of Governor Jeb Bush and the Florida Legislature at the time when information began to surface about the cozy relationship between the PSC and the utilities they are charged with regulating. The purpose of Florida’s PSC is be the watchdog on behalf of Florida’s utilities customers. The PSC is to make sure that customers receive essential services such as electricity, natural gas, water, wastewater, and telephones in a “safe, reasonable, and reliable manner.” The PSC provides oversight to rates, economic regulation, market oversight, and safety. But over the years, the PSC has become stacked with industry insiders and lobbyists who do not have the best interest of Floridians in mind.

In October of 2009 the Jacksonville Observer reported on the cozy relationship between PSC commissioners and industry insiders. Governor Charlie Crist was trying to clean up the mess. The case involved long time Public Service Commissioner Katrina McMurrian who resigned early when Crist appointed someone else to her seat, leaving an empty seat on the commission. Her replacement had not been scheduled to be sworn-in until January of the next year.  McMurrian had been on the commission since graduating from college in 1994. McMurrian was the second commissioner to be ousted by Crist on one week. Governor Crist then asked the commission to delay any action until the new commissioners could be sworn-in the next January, leaving two empty seats on the commission.

Crist said the reason for the shake-up was in reaction to allegations of the PSC having cozy relationships with the industry they were supposed to be regulating:

“The turnover in the PSC comes amid criticism about appearances that the panel is too close to the companies it regulates. The cloud has mostly been over staff interactions with company officials, though McMurrian did take some heat for attending a dinner with an FPL executive as the company was requesting its rate increase, and for speaking at a utility-sponsored conference.”

But earlier in the year, Crist approved two candidates who had no experience in utilities, consumer advocacy, or history with the PSC leaving many doubting the integrity of the commission under Charlie Crist. After the exodus, the commission continued talks on a proposed 300 mile $1.6 billion Florida Power & Light gas pipeline. McMurrian may have possibly been replaced not because of her “cozy” relationship with the utilities, but instead so Crist could create a commission with an even cozier relationship with the utilities they are charged with regulating. There were reports of commissioners accepting gifts from utility insiders at the same time the PSC was to be protecting customers.

A 2006 law allowed FPL and Progress Energy to charge customers for new nuclear and repairs to existing nuclear before any work or proposals had been completed. PSC commissioners who opposed the pre-pay plan to allow the utilities to increase rates as much as 40% were replaced. Objecting to the plan that allowed the utilities to charge customers for work that may never be done resulted in every commissioner, with the exception of one, being replaced with commissioners who would go along with the plan. The plan allows Progress Energy and FPL to charge customers for a new nuclear plant, to restart a closed reactor, and for repairs at another plant. There was no guarantee that this work will ever be done and, if the work is not completed, customers would not receive a refund or have their rates reduced to pre-approval rates.

Today, the saga continues under Governor Rick Scott. And a March 1, 2012 article in the Tampa Bay Times illustrates how, with the help of Warren Buffett, the trend is spreading nationwide:

“Florida lawmakers’ misguided 2006 gift to the nuclear power industry was a doozy: to let utilities like Progress Energy and Florida Power & Light charge their customers long in advance to build nuclear power plants that private lenders would never touch with a 10-foot pole.

One of the nation’s best-known investors eager for a no-risk financial ticket to build a nuclear power plant on the back of ratepayers is billionaire Warren Buffett. His control of Midwest power company MidAmerican coincides with lobbying efforts to push a measure in Iowa that — like Florida’s 2006 law — would do away with market discipline and emboldens power companies to pre-charge their customers for future nuclear power plants.

The nuclear industry is attempting to expand the use of something called Construction Work in Progress (CWIP), also known as “advance nuclear cost recovery” for financing nuclear plants. It’s an absurd concept, bullied into law in Florida by highly paid utility lobbyists who convinced our easily swayed state legislators that forcing customers to prepay for hyper-expensive nuclear power plants — Progress Energy’s two proposed reactors in Levy County are $22.5 billion and counting — was somehow a good idea.

In fact, it is one of the worst ideas ever endorsed by Florida lawmakers, who remain clueless or indifferent to the extraordinary rate hikes Floridians will face in the next decade, before any nuke plant begins operation.

Florida Sen. Mike Fasano, R-New Port Richey, regrets voting for advanced nuclear cost recovery in 2006. He’s now trying to tell the people in Iowa to beware. His opinion piece urging Iowans to reject this form of nuclear plant financing ran recently in the Iowa Press Citizen.

“If passed by the Iowa Senate,” James Larew, general counsel for a former Iowa governor wrote in the Des Moines Register, “the law would provide an opening for what will effectively be the largest publicly sanctioned, but privately imposed, fleecing of Iowa consumers in the state’s history.”

If the free market rejects nuclear power plants as too risky and too expensive to finance, why should we be building such projects?

Imposing escalating, monthly nuclear plant construction fees on rate payers for years in advance smacks of indentured financial servitude. Alas, Florida lawmakers will never acknowledge this while utilities pour big bucks into their political coffers.”

In October of 2011, WSVN News reported that customers will foot the bill for $282 million in nuclear upgrades:

“Customers of Florida’s two largest electric utilities will pay $282 million next year to upgrade nuclear power plants and build new ones even if those projects are never completed.

Some local officials, individual customers and consumer groups objected to the fees on grounds the utilities have not yet made final decisions to go forward with the projects. They also have not yet received all needed licensing and regulatory approval.

The commission in 2012 will consider whether to pass on to consumers various costs related to the shut-down of Progress Energy’s Crystal River nuclear plant for repairs in 2009. It’s still closed and isn’t expected to reopen until 2014.”

In November of 2012 the Florida Center for Investigative Reporting called the problems at the Crystal River nuclear plant a “planning meltdown” that would cost $2.5 billion to repair. While installing equipment at the plant, workers found a crack in the 42 inch thick concrete wall on a containment building. The containment building “serves as the last line of defense in the event of a radioactive accident.” Six months later, another crack was found and it turns out that Progress was warned about this and simply ignored it until it became too large an issue to keep secret any longer:

“The Nuclear Regulatory Commission investigated the mysterious cracks and found they were the result of the procedure used by Progress Energy, which owns the Crystal River plant, to replace the steam generator.

The total cost of repairs for that mistake is now estimated to be $2.5 billion. Part of that is covered by insurance, but Progress wants customers to pony up $670 million of the costs…

The Times published a stunning and well-sourced investigative piece that revealed a construction foreman named Charles Hovey had actually warned Progress months ahead of time about the procedures, and that they could damage the containment building.

Specifically, the two cracks developed because Progress did not follow the standard protocol for loosening the tension in steel “tendons” that line the walls. They loosened fewer of those cables than had been the norm in the 34 other steam generation replacements (all successful). And they loosened them out of order. Apparently all to save time and money.

When the engineering firm hired to develop the procedures for the generator replacement called for the loosening of what Progress felt was too many cables, John Holliday, the man responsible for the containment building job, told them “to put on their thinking caps and determine if there is an alternative method of analysis that we could pursue that would result in a lot less tendons being de-tensioned.”

And they did indeed come up with a lower number. But not with the expected cost savings. The short-cut resulted in the plant not being able to produce electricity for more than two years, and the cost is so overwhelming that Progress is now even considering shuttering the plant.

Now, state Sen. Mike Fasano wants Progress to come before the senate utilities committee and explain itself.

And state Rep. Michelle Rehwinkel Vasilinda has re-introduced a bill that would rescind a state law allowing state regulators to order customers to pay for the construction costs of nuclear power plants even if those plants never get built. Progress has been billing its customers for a yet-to-be-built $20 billion plant in Levy County.”

Most recently, on June 22, 2012, the Tampa Bay times reported that the cracks at Crystal River had been halted but a merger between Progress Energy, owner of the Crystal river plant, and Duke Energy means that the future of the plant still remains unclear. Then, another crack was discovered. The plant has been offline since July of 2009, there has been an additional $1.3 billion in repair costs, and an additional $1 billion cost to purchase replacement electricity.

But wait, there’s more…

The Progress Energy-Duke merger is now showing cracks of its own. On July 12, 2012 Reuters reported that the likelihood that the damaged Crystal River nuclear reactor will produce any electricity has been placed into doubt following the merger with the surprise exit of Progress’ top executive, Bill Johnson according to testimony by Duke’s chief executive Jim Rogers.

“Crystal River’s prolonged shut-down and issues at other Progress-owned nuclear units played a role in Johnson’s exit, the man who had been slated to lead the merged company, according to the testimony.

Duke board members voted to oust Johnson from the job of chief executive of the merged company just hours after the deal was completed.

Johnson’s departure may now put the restart of Crystal River in doubt as he had been a strong proponent of repairing it.

Crystal River “is one area we had great concern about,” Rogers said, citing insight gained from Duke director James Rhodes, the retired chief executive of the Institute of Nuclear Power Operations (INPO), a nuclear industry group that promotes safety and reliability.

Rogers told North Carolina regulators that the board became concerned that Progress’ assessment of the risk and its estimate of the cost to repair the damaged reactor building were not realistic and ordered an independent analysis.

On July 2, the same day Duke completed the merger, Progress told its state regulators it had moved forward to select a company to repair Crystal River “should the choice to repair (the reactor building) be made,” in a status filing.

Rogers told the North Carolina commission Duke will “pour money” into Progress’ operating reactors to “bring them back to excellence.”

He made no such commitment for Crystal River.”

Florida has 3 nuclear power facilities and all have been plagued with safety issues for years. The Crystal River plant, located in Crystal River, Florida would require an evacuation of about 880,274 people if a nuclear radiation release were to occur. The Port St. Lucie plant, located in Port St. Lucie, Florida would require an evacuation of about 1,114,638 people if a release were to occur. And the Turkey Point plant, located in Homestead, Florida would require an evacuation of about 3,223,951 people should a release occur.  In 2002, the Nuclear Regulatory Commission extended the license of the Turkey Point plant for 20 years beyond its intended life span. In 2003, they extended the license for the Port St. Lucie plant for 20 years beyond its indented life span. Thus creating “Zombie Nukes” – these plants are supposed to be shut down and dead. But the NRC, at the behest of industry lobbyists and state legislatures, keeps them alive placing millions at risk.

The Turkey Point plant in Homestead is bordered by ocean on its east and south and the Everglades are to the west. This leaves one route out in case of an evacuation order. Imagine 3,223,951 people trying to evacuate north at once. At least for hurricanes, the residents will get several days notice to prepare and can evacuate in waves. Not so with a nuclear accident – everyone will need to leave at once when the order is given. But looking at the industry records, it is clear that they would probably mess that up too, creating an even bigger emergency. You can look up all three Florida nuclear plants, and their evacuation zones at the site of Physicians For Social Responsibility by clicking here.

The Institute For Southern Studies reported in 2011 that Florida began planning a two-reactor plant at an undeveloped site in Levy county. Before even one shovel of dirt had been turned, $1.1 billion had been spent just for planning. Much of this cost was passed to customers. In 2006, the estimated cost of the Levy plant was $6 billion. The estimated cost in 2007 was $10 billion. The next year, the estimated cost had ballooned to $17 billion. The latest cost estimate for the Levy plant puts it at a whopping $22 billion. The estimated cost of two additional reactors that Florida Power & Light is planning to build at its Turkey Point plant near Miami is $20 billion. Under the state’s pay-in-advance law, the amount that would be refunded to utility customers if the planned reactors are never built is $0 dollars. Nothing – not even a dime.

When, if ever, this nuclear power debacle in Florida is over and done with, it is abundantly clear that Florida taxpayers and rate payers will be left holding the bag for this whole fiasco as all those responsible are fighting responsibility for mistakes and cost overruns. And it’s a bag full of nuclear waste and leaky facilities we will be stuck holding. This is the result of years of cozy relationships between the industry, the Florida Legislature, and the PSC – aided and abetted by several Florida governors.  This is not only a money problem for the state, it is a safety problem. Finding cracks in containment walls at nuclear facilities should be a warning sign to everyone, not to mention old failing “zombie nukes” that should have never had their operating licensing renewed beyond their intended lifespan of 40 years.. It is up to the citizens to stop this madness that threatens the economic future of Florida and the health and safety of its residents – the PSC and the legislature will not step up and do the right thing. Vote them out, create change, stop this.

By Jim Weeks

Sources:

Jacksonville Observer: Ousted PSC Commissioner Resigns Early

WSVN: Florida customers will pay $282m for nuclear upgrades

Engineering.com News Record: Fla. Public Counsel Calls Botched Repair at Crystal River ‘A Huge Construction Negligence Case’

Tampa Bay Times: Unfortunate Trend: Buffett wants no-risk funding for nuclear power, just like Florida gave its utilities

The Nation Magazine: Zombie Nuke Plants

Physicians For Social Responsibility: Evacuation Zones For Nuclear Reactors