How convenient!
It always ends up that way indirectly anyway, but this is a bit brazen.
This is like Walmart saying "We're building a new store and billing you for your share of what it costs us".
Posted on 07/13/2008 6:28:07 AM PDT by kellynla
TALLAHASSEE -- Faced with growing demand for electricity and worries about climate change, state leaders have moved forward with a strategy during the past two years: Build nuclear-power plants and look for alternative sources of clean energy.
But for Florida homeowners and businesses, it won't come cheap.
Customers of Progress Energy Florida and Florida Power & Light in 2009 likely will start paying hundreds of millions of dollars a year to help finance new energy projects -- much of it for nuclear plants.
The extra charges are expected at the same time customers will get hit with higher bills because of the soaring costs of coal, natural gas and oil, which fuel existing power plants.
State Public Counsel J.R. Kelly, whose office represents consumers in utility issues, said he is concerned about increased costs. But projects such as building nuclear-power plants and solar-energy facilities come at a price.
"What everybody has to realize is that going green does not mean going cheap," Kelly said.
The Florida Public Service Commission could give an important initial approval Tuesday to plans by Progress Energy to build a nuclear plant in Levy County. The commission, which regulates utilities, gave a similar approval earlier this year to a FPL nuclear project in Miami-Dade County.
Also during the meeting, the commission will consider a $688 million FPL proposal to build solar projects in Martin, DeSoto and Brevard counties.
Progress estimates it will spend about $17 billion on the Levy County project, as it builds two nuclear generating units and a massive transmission system.
The units would not start producing power until 2016 and 2017, but Progress would begin collecting steadily increasing amounts from customers next year to help finance the project.
For example, a residential customer would pay an additional $7.53 on a monthly bill for 1,000 kilowatt hours of electricity in 2009, according to projections.
Progress spokeswoman Cherie Jacobs said the company recognizes rising electricity prices, particularly with higher fuel costs for the existing power plants, can put a "burden on consumers."
But the nuclear plant would allow the company, which serves much of western Volusia County, to save about $1 billion a year in future fuel expenses because it would reduce reliance on coal and natural gas.
"In the long run, a nuclear plant can help bring down fuel costs and help make that portion of the customer's bill more stable," Jacobs said.
Energy policy has become one of the top issues in Florida during the past two years, as Gov. Charlie Crist has pushed to limit greenhouse-gas emissions that scientists say cause global warming.
Along with looking at solar and other types of renewable energy, state leaders have taken steps to encourage nuclear power because it has no emissions and can help meet the state's growing demand for electricity. Florida hasn't had a new nuclear plant since 1983, and opponents remain concerned about disposal of radioactive waste.
But the debate also comes amid increasing prices for coal, natural gas and oil that are making it more expensive to produce power.
The Public Service Commission on July 1 approved more than $900 million in rate increases to cover higher fuel costs for FPL and Progress. Customers will pay half of the costs this year and half in 2009.
Beginning in August, FPL residential customers who use 1,000 kilowatt hours of electricity a month will see their bills climb from $102.63 to $110.77, about an 8 percent increase.
Progress bills for 1,000 kilowatt hours -- a common measurement used by utilities -- will go from $108.11 to $110.59, up 2 percent.
But the companies already are warning that rates likely will go higher in 2009, largely because of fuel costs but also because of other factors such as the nuclear-plant costs.
FPL, for example, is seeking approval to collect $259 million next year for costs such as permitting, licensing and engineering on its planned Miami-Dade nuclear project.
The company, which serves much of eastern Volusia County and Flagler County, estimates customers would pay an additional $2.51 a month for 1,000 kilowatt hours.
The FPL solar project would have a relatively minor effect on rates next year. Company officials said an exact amount has not been determined, but it would be less than 83 cents for 1,000 kilowatt hours.
State lawmakers have tried to spur more nuclear power in recent years, making changes aimed at helping to finance nuclear projects.
Those changes will allow the companies to recoup costs for planning and building nuclear plants and related transmission lines each year, rather than having to wait until the plants begin operating.
A 2006 law even went so far as to allow utilities to recoup costs if the plants are not completed.
Jacobs, the Progress spokeswoman, said it is unlikely any Florida utility would undertake the financial risk of building a nuclear plant without the legislative changes.
But the expected cost increases in the coming years for customers have raised concerns from regulators and consumer advocates.
The Public Service Commission's staff, for instance, recommended Progress try to jointly own the Levy County nuclear plant with other utilities to help reduce costs. Jacobs said Progress is in negotiations on such an arrangement.
jim.saunders@news-jrnl.com
Brace for (Even) Higher Rates
Florida regulators will be asked this week to approve plans by power companies seeking to develop new sources of energy, including nuclear and solar projects.
While it could be years before the projects start producing power, customers could see increases in their rates as soon as next year.
Earlier this month, the Florida Public Service Commission approved $900 million in rate increases to offset higher fuel costs. Here's how those fuel increases -- which begin in August -- will affect residential customers who use 1,000 kilowatt hours of electricity:
FLORIDA POWER & LIGHT
current bill: $102.63
new bill: $110.77
PROGRESS ENERGY FLORIDA
current bill: $108.11
new bill: $110.59
SOURCES: Companies; Florida PSC
it’s always a negative if you’re not doing what the jane fondas
want you to do.
whatta they want life for cheap?
if the new left got their way, we’d be living the cuban lifestyle.
fearing gulags and driving 1958 buicks.
DUH?
How convenient!
It always ends up that way indirectly anyway, but this is a bit brazen.
This is like Walmart saying "We're building a new store and billing you for your share of what it costs us".
Whatever happened to utilities floating bonds for major capital projects ????
“This is like Walmart saying “We’re building a new store and billing you for your share of what it costs us”.”
Do you find something wrong with Walmart passing along the cost of building a new store? Do you have another alternative?
“Whatever happened to utilities floating bonds for major capital projects ????”
This is an all cash world when it comes to anything associated with bonds these days.
If you want it, you have to pay for it. But there is a large cost of government within this cost, by the way.
“Whatever happened to utilities floating bonds for major capital projects ????”
Do you think floating bonds relieves the consumer from paying for the bonds? Where do you think the funds to repay the interest and repayment of principle comes from?
You didn't get my (obviously poorly made) point.
Walmart does NOT send us a bill for building new stores....the power company DOES and gets by with it.
Capitol expenditures should be made by the stockholders who benefit from them and not the unlucky, forced customers of a monopoly industry like the power company.
* The Walmart customers can shop elsewhere if they don't like the idea, but power company customers are stuck unless they move elsewhere.
I hope this clarifies my previously obscure point.
No nuclear power plants since 1983. Now there’s an education in one sentence. The need for additional power didn’t happen yesterday and if the building of power plants had started years ago, as they properly should have, the state wouldn’t be paying for plants still on the drawing boards.
No drilling for oil, no nukes for the past 25 years, no tears for Florida.
If they were really worried about it and didn’t want to tax the people more, take all the lotto money in every state and put it toward nuclear energy. Of course in California, the education department would have fits, but so what, they waste all the money anyway.
Or Florida could allow drilling off its coast leading (potentially) to an oil boom and all the revenues that follow.
That too!
Can you just imagine how much revenue could be generated for the coastal states if ALL were to start drilling offshore AND building co-generation nuclear power plants that would not only generate electricity BUT ALSO desalinate ocean water! Talk about R...E...V...E...N...U...E!
The USA could not only be the electrical supplier to North & South America but could irrigate the deserts of America and literally FEED THE WORLD!
Are there secret alternative sources of clean energy that nobody knows about that state leaders have to look for it ?
All alternative sources of clean energy are known factors.
I think what the MSM knucklehead means, are they any alternative sources of clean energy that work as effective as oil
I have no problem with doing this. It’s either pay now for new plants or pay later for higher costs of oil.
I think the difference is, we do not NEED Walmart stores, but we do NEED electricity.
Given the current anti-power project environmental/endangered species/NIMBY/younameit problems with building real power plants.....
.....I don't think you would find enough private investors.
The risk to voluntary private investors is too great. The problem of future power shortages is greater. Something needs to be done. Doing nothing is rapidly reaching the point where the consequences will be very real and painful.
All of this said, I think the other solution would be better. Sending all the lefties who oppose power stations to the third world country of their choice. Not only would we be rid of them, but the electrical demand would reduce to the point where the need for new power plants would go away for a long time!
Capitol expenditures should be made by the stockholders who benefit from them and not the unlucky, forced customers of a monopoly industry like the power company.
WalMart does not have a public utility commission that regulates its prices and the return it makes. Accordingly, WalMart can and does set its prices to cover the cost of building and maintaining its stores as well as the direct cost of goods sold, labor costs, etc.
Power utilities are rate and price regulated, and have monopoly service areas. The exchange for rate and price regulation is that that the cost of capital expenditures goes into the rate base and a reasonable return on that rate base is a legitimate part of the utility's price of service. And, the public utility commission must approve new construction as being prudent and in the public interest. If it is, then the utility is entitled to earn a return on that investment.
For the renewable energy ping list.
“What everybody has to realize is that going green does not mean going cheap,”
The problem is, the people of Florida allowed environmentalists to control energy development. As long as they continue to allow this, they will continue to have rapidly rising energy costs.
“Walmart does NOT send us a bill for building new stores....the power company DOES and gets by with it.”
It makes no difference how you pay the price of captital expenditures. It can be allocated to the price of the power or it can be identified separately on your bill. What difference does it make to you?
“Capitol expenditures should be made by the stockholders who benefit from them and not the unlucky, forced customers of a monopoly industry like the power company.”
No publically traded company requires stockholders to pay for capital expenditures out of their pockets. Other than the fact that you want someone else to pay your bills, why should the power companies treat capital expenditures differntly than other companies
It isn’t just Florida where this occurs, it’s in every state in the union.
DUH!
My point was that with Walmart, free enterprise is at work and we can choose not to do business with them and shop elsewhere if we don't like the prices they are charging. That's what capitalism is all about.
The same can NOT be said of the power company whose monopoly keeps you enslaved to their prices and their "ain't Jack" you can do about it unless you want to move elsewhere......some choice!
I can't understand why you consider them the same.
I thought the gubbmint paid all that stuff??!!?
“I can’t understand why you consider them the same.”
For the simple reason that capital expenditures are paid in the same way by the same people (the customer) regardless of whether it is Walmart of the local power company.
Here’s the part you missing is this. Sure, you can choose not to patronize walmart. You can go to KMart or Sears or where ever you choose. You’ll still pay a portion of their captital expenditures. The only way to avoid this is to live as self-contained hermit who never buys anything. You have the same choice with your power company. You can go off the grid and do without.
Yes, and CA needs to do this also. Build desalination plants and electrical generators off the coast. I have been screaming about this for decades. Both coasts have unlimited water resources in the form of the oceans and will not use them because of pandering to the idiotic country destroying greenies. Makes a guy want to puke. And now Sacramento is faking a drought, which they couldn't get away with if we had desalination plants working full time off the coast.
Sure can....and I get to choose what I think is the best deal. They have to compete to get a price that's attractive to the customer.
The power company competes with no one.
Nobody wants to pay more for utilities. Everybody wants to pay less. Reality is that these things cost money, and oil is the cheapest resource ever.
That is a huge great idea. Sir you belong on the Public service Commision in my Florida as thasy have no idea of what they are doing.........
Wasn’t your original complaint the fact that the power company passed on capital expenditures to the consumer and that walmart didn’t?
Now, it appears that your real complaint is that there is no competition between power companies. If that’s correct, then why do you think competing power companies would provide cheaper rates? Wouldn’t two or more companies have double the capital expenditures? Wouldn’t that mean your share of the capital expenditures would double?
No, it was monopoly (no choice) vs. free enterprise (choice) and, yes, the way power companies operate without competition.
Wouldn’t two or more companies have double the capital expenditures? Wouldn’t that mean your share of the capital expenditures would double?
If a company like Walmart owned all the stores and had no competition like the scenario you suggest for power companies (wasting resources among several or many companies), and instead of having to have a lot of different stores there could just be one, efficient big one, they too could operate more efficiently. That's part of the idea that inspired socialism/communism and we all know how well that worked.
The other argument is that the power companies are controlled by government regulators (Govt regulators, now there's a concept!).....and I fail to see where that has ever worked.
Remember when "Ma Bell" owned and operated all the telephones (with no waste of having two or more sets of capital expenditures) and had their set of 'regulated' prices....until competition from multiple service providers proved it could be done cheaper on the free market even though it meant expenditures for more facilities.
I fail to see how the "all the eggs in one basket" approach ever serves the consumer well.
No: consumers pay the INTEREST on the floated bonds. But generating capital for improvements, at least previously, was done in capital markets, not directly from the consumers. . .
“No: consumers pay the INTEREST on the floated bonds. But generating capital for improvements, at least previously, was done in capital markets, not directly from the consumers.”
This article doesn’t really say that the funds are not coming from the capital markets. It only states that the consumers will get the bill. Even if the funds do come from the capital markets, utilities have no other source of revenue to pay either principal or interest except revenue from their customers.
“I fail to see how the “all the eggs in one basket” approach ever serves the consumer well.”
I’m all in favor of competition since it usually reduces costs and improves service. However, usually is not the same as always. If one could devise a strategy that provides for reduced costs and improved services thru competion in the utilities markets, that person should be able to make a bundle.
The first hurdle that must be faced would be public oposition. You would have at least twice as many power plants. At least twice as many transmission lines. Those are big hurdles to selling the concept to obtain the necessary capital.
The second hurdle is devising a cost model that would actually produce reduced costs. Power is a very capital intensive industry. The economies of scale work badly against smaller power plants and multiple transmission lines inherent to any competitive model.
maybe i didnt read this correctly but does anyone else think its a BAD idea to build nuclear plants in a state that gets hit with hurricanes and tornados on a regular basis?
Please Freep Mail me if you'd like on/off
“Suggestion: Build cogeneration nuclear power plants that not only generate electricity but desalinate ocean water!”
The new nuclear power plant slated for Calvert Cliffs in Maryland (which will double the generating capacity of the entire site) will do just that!
It seems that after decades of slumber, the nuclear industry is beginning to come back to life. A few weeks ago, I saw that over 30 new nuclear plants are currently in planning or early design stages, and that these new plants will boost electricity generation from nuclear plants by 60% or more!
sitetest
Excellent!
Thanks for the info!
I live about 20 miles from a nuclear plant in Missouri. They (Ameren UE) are proposing a second reactor and starting the permitting process. Had a public hearing on the proposed reactor. Of course the cave people came out in protest.
Missouri currently has a state law that prohibits advance collection billing on construction. That is a hurdle in the project. Without some advance financing of the project it is estimated that interest costs alone could add $2.5 Billion dollars to the cost of the project over the 10 year construction period.
I am in favor of this project in many ways. 3500 jobs over 10 years for construction. (Yes I could retire on that project in my trade). Several hundred permanent jobs. Property taxes would stabilize in our county. Plus the energy we need in the future will be available in 10 years if we start now. Same goes for drilling new oil fields in Alaska that in 10 years we can have it all when we need it.
The cave people need to disconnect from the grid completely.
The proposed second reactor here is estimated to cost $6 BILLION DOLLARs. Interest alone during construction could add $3 BILLION dollars in interest.
Either way we go, we will PAY for construction. If we pay for just the 6 Billion it makes more rate sense than paying $9 billion for the same project.
Without adequate financing on this kind of project the temptation to cut corners on safety and efficiency will be greater. And the cost to consumers could be immeasurable.
We need to face up to the fact that the US government has socialized energy development and production in America.
Since the government has the final say on allowing a permit to drill, build, or otherwise develop viable commercial energy, it is no longer free enterprise that determines who provides energy and where they provide it.
America has a vast, interconnected grid of power lines. Without some kind of regulation that forces co-operation between competing power producers, what would stop a utility from providing electricity to a few choice cities and leaving everyone else in the dark? Or what about charging higher rates to one end of the line than the other? What if a plant goes down? Without interconnectivity everyone goes dark because the next power plant could not divert electricity.
Unfortunately free enterprise is not in control of any source of energy in America. Government regulation has reigned in the competition and forced them to accept each other, along with rates barely capable of maintaining current infrastructure. All of this in the name of cheap energy for all.
My friend, cheap energy is no longer available regardless of the form of delivery. And it is unfortunate that some people will be priced out as consumers without government intervention. Why is it that the poor are always the ones represented as a reason for a rate hike denial by the same government that rations energy?
...America has a vast, interconnected grid of power lines....
And a vast interconnected grid of lawyers. The lawyers who are actually parasites on the economy, make money by getting paid for holding up anything that smacks of energy growth.
Yes. Green tie lawyers have added trillions of dollars to our cost of living by obstructing and litigating nearly every phase of our life.
Problem with lawyers is that we need a loser pays all system. That would eliminate frivolous lawsuits intended to obstruct or extort money from rich capitalists.
file a lawsuit. You lose, you pay! But lawyers like their two faced cash cow. Why complain about rich oil companies when there are just as many rich lawyers that need to be regulated?
This is almost exactly what was said years ago about the Ma Bell (AT&T) monopoly on telephone service.....and I believed it at the time. The parallels are many.
In north Alabama, it so happens that there are competing providers of electricity....it's been that way at least since the early 60's when I lived there and it works just fine.
“competing providers od electricity”
There is a difference between providers and producers in most cases.
I purchase my electricity from a Rural Co-op. They have limited “production” because they own a small amount of the generating capability. So they have to purchase electricity from a “producer” to satisfy their demand.
Enron was a “provider” of electricity. Their profit came from purchasing wholesale power from a producer and reselling it where the demand was highest.
As we know, Enron went belly up. Why? One reason is that they had no contingency backup to “produce” electricity. They were at the mercy of higher rates just like consumers and no longer could make money brokering electricity.
Breaking up the Bell’s involved splitting up infrastructure to various entities but the grid remained.
Dividing up power generating plants, centrally located is next to impossible. Allocation of electricity generating capacity is the only way. But the power plant still requires revenues to repay loans and operating expenses back to the group of investors who put up the money in the first place.
It used to be every small town had it’s own power plant. But as electric grids became more reliable and cost less to operate, the towns shut down their plants. A lot of that came from environmental regulations and coal availability.
Socialism in America energy sector is alive and well. Central planning comrades have succeeded by making us dependent on their choices of who supplies oil and electricity. I tend to agree with you about the breaking up of monopolies being good. But the one thing the monopolies had going for them was the ability to raise capital. their service sucked.
“The other argument is that the power companies are controlled by government regulators (Govt regulators, now there’s a concept!).....and I fail to see where that has ever worked.”
“In north Alabama, it so happens that there are competing providers of electricity....it’s been that way at least since the early 60’s when I lived there and it works just fine.”
I find it strange that you would hold North Alabama up as a standard for competition and at the same time decry government regulation.
Since you used to live in North Alabama, you should have been aware that the Tennessee Value Authority (a government agency established by FDR) provides over 18 Billion KW hours of electricity to 25 utilities that sell the power to their customers. I do believe TVA (a government agency) provides most of the power in North Alabama.
Not in this case....they were coal-fired plants taking advantage of abundant local fuel resources, although I'm pretty sure they were on part of a grid that included TVA. I used to fish within sight of one of their steam plants.
You're probably thinking of Muscle Shoals, Sheffield, Russelville, Decatur, Florence, Tuscumbia, Moutlon, Scottsboro, Ft. Payne, Huntsville (probably), Athens and the like who purchase their electric power from TVA.
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