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Fla. commission rejects FPL's cost recovery deferral for Turkey Point expansion


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Essential Energy Insights - October 2021

Fla. commission rejects FPL's cost recovery deferral for Turkey Point expansion

SNL Image

A foam-filled cooling canal and the two nuclear reactor containment buildings, center rear, at the Turkey Point Nuclear Power Plant in Homestead, Fla.

Source: Associated Press

Florida regulators on Oct. 17 rejected Florida Power & Light Co.'s request to defer cost recovery for its Turkey Point nuclear plant expansion and declined to rule whether the utility should continue pursuing a federal permit for the project.

But members of the Florida Public Service Commission used the hearing to reaffirm their support for nuclear as a baseload power source and to express worries that the state is "extremely vulnerable" because of its reliance on natural gas.

Florida Power & Light, or FPL, had asked the PSC if it could delay collecting customer surcharges while the utility puts a self-described "pause" on work at Turkey Point. The NextEra Energy Inc. subsidiary, however, is still engaged in the expansion as it seeks to acquire a combined operating license, or COL, from the U.S. Nuclear Regulatory Commission.

What worries both critics and commissioners is that FPL has not filed a feasibility analysis of the project for the past two years, a requirement under state law. The lack of long-term studies, which stakeholders say will further drag out Turkey Point's timeline, was cited as the reason why the PSC voted not to allow approval of deferred cost recovery nor affirm the reasonableness of FPL continuing to pursue a COL.

Commissioner Donald Polmann argued against what he saw as FPL using a cost recovery docket to render a project management, not customer surcharge, determination.

"My concern is that the utility is creating something unilaterally," he said of FPL's pause, the concept of which is not provided for in Florida statute or PSC regulations. "It would do great injury to our ability to apply and interpret our own rule. So I would offer that we should not accept, and certainly not celebrate, the concept of a pause in the context of the [nuclear cost recovery clause], and in fact, affirm otherwise.

"We should take a position on that and make it absolutely clear to this utility and every other utility that we expect them to operate inside the rules," Polmann added. "Frankly, that should be obvious to everyone."

Others interpreted the questions at hand differently. "It's not about the recovery here," Commissioner Art Graham said. "We've come this far; [FPL is] on the 2-yard line. Do you push it in and get [the COL], or do you not?"

The NRC is scheduled to hold a hearing Dec. 12 on FPL's license application. The utility has said Turkey Point's new reactors could go online by 2032 and that their total cost could be as high as $21.87 billion.

PSC member concerned about dependence on gas

"This is a hard issue. I think the whole country is watching the new fleet of nuclear deployments being constructed, or to be constructed around the country," PSC Chairman Julie Brown said of the Turkey Point, V.C. Summer and Alvin W. Vogtle plant expansions. "This particular issue is a big one for us."

"Like it or not, nuclear power has been a very important to our fleet over decades for many, many Floridians. It's provided clean energy; it's been reliable," she said. "And I believe Turkey Point [units] 3 and 4 will continue to do so. I'd like to think [units] 6 and 7 would come online, but based on the fact that we did not have a feasibility study for this year's proceeding, it's hard to say that."

Commissioner Gary Clark, appointed to the PSC in September by Gov. Rick Scott, said FPL's COL pursuit "is critical from an infrastructure standpoint, from a base capacity standpoint. Our current dependence on natural gas is extremely alarming to me.

"I don't know if we can make a reasonable determination, but it certainly is not unreasonable to think that this company would want to pursue this license," he said. "I think it's an extremely good asset for FPL to have on the books whether it's ever built or not."

Clark said he does not think consumers will be hurt financially "in any stretch of the imagination by pursuing this and getting this combined operating license closed out."

Southern Alliance for Clean Energy Executive Director Stephen Smith disagrees, saying in a news release that his organization is "disappointed that the Commission left the door open for FPL to come back at a later date to seek additional costs from customers." A PSC staffer confirmed at the hearing that the utility could recover Turkey Point costs through traditional rate-making without having to file a feasibility analysis.