Duke Energy proposal could cost customers more in the long run

Duke Energy Florida on Monday said it wants to suspend most of the remaining nuclear charge on customers' bills for the canceled Levy County nuclear plant until it resolves a half-billion lawsuit over the project's contract.

The proposal would give customers at least temporary relief from a $3.45 charge on the average bill each month, beginning around June 1, about six months earlier than expected.

But there's a catch: While the proposal, if approved as filed, would save customers money in the short term, they might face far greater costs in the long run.

The proposal involves some complex maneuvering by the utility. At issue is Duke's lawsuit with the contractor for the Levy project, Westinghouse Electric.

Duke says Westinghouse owes $54 million for equipment the contractor never delivered, money the utility's customers are paying in their bills.

Westinghouse claims Duke owes $512 million for canceling the Levy contract.

In its request to the PSC Monday, Duke asked for a "deferral of collection of the approximate $54 million currently involved in litigation until such time as the litigation is finalized."

If Duke loses the court case, the company wants to preserve the ability to collect from customers both the $54 million and the $512 million that would have to be paid to Westinghouse.

For Duke's part, the argument is that the nuclear advance fee law allows utilities to recover whatever reasonable costs are associated with an approved project, even if it is canceled.

"Depending on the results of the litigation, customers may see an impact on their bill in the future. However, until the courts have an opportunity to hear the case, it is too early to determine," Sterling Ivey, a Duke spokesman, said in response to the Times' questions about the proposal.

The case is expected to go to trial early next year. If a settlement were reached, customers also could be on the hook for more money.

Charles Rehwinkel, deputy state public counsel, who represents consumers before the PSC, said he would be filing a response to Duke's proposal this week.

"We fully support the commission's expected approval of the (proposal) that would cause customers' bills to go down on June 1," he said. "On the other hand, we don't support any effort by Duke to increase customers' bills in the future based on litigation between Duke and Westinghouse."

The PSC is expected to review and decide on Duke's proposal within 60 days. An approval would be a significant change in position from last summer when the commission ordered Duke to credit customers the $54 million.

That PSC decision followed a Tampa Bay Times report about Duke charging customers $54 million for the equipment that was never purchased. After the report, a political brouhaha erupted and state regulators ordered Duke to credit customers the $54 million.

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Duke has been under fire for its handling of its nuclear projects in Florida. The utility's troubles began with the botched upgrade of the Crystal River nuclear plant in Citrus County that led to the permanent closure of Duke's sole reactor in Florida.

In addition, Duke's 1.7 million customers have been paying in advance for construction of two new reactors about 10 miles north of the Crystal River plant in Levy County. But as the almost $25 billion project became too costly, Duke canceled it, leaving customers on the hook for $1.5 billion in expenditures.

State lawmakers frustrated with the nuclear charges have filed several measures for the legislative session that starts today to end the nuclear advance fee, which became law in 2006 as a way to hasten construction of new nuclear plants.

Contact Ivan Penn at ipenn@tampabay.com or (727) 892-2332. Follow @Consumers_Edge.