Utilities Can Recover Nuclear Costs, Florida High Court Rules

A Florida law allowing utilities owned by Duke Energy Corp. (DUK) and NextEra Energy Inc. (NEE) to charge customers in advance for nuclear power projects that may not get built is constitutional, the state Supreme Court ruled.

The high court in Tallahassee today rejected arguments that the law was an improper delegation of power to the five-member Florida Public Service Commission, which in November 2011 approved utilities’ plans to charge customers $282 million in nuclear project costs in 2011-12.

The court, which adjudicates disputes involving electric, gas and phone rates, also rejected a claim by the Southern Alliance for Clean Energy, a Knoxville, Tennessee-based environmental group, that the decision to allow the charges was improper.

In its 21-page opinion the court noted that it’s not its “function to substitute its judgement for that of the Legislature as to the wisdom or policy of a particular statute. Authorizing recovery of preconstruction costs through customer rates in order to promote utility company investment in new nuclear power plants, even though those plants might never be built, is a policy decision for the Legislature, not this court.”

Ted Kury, director of energy studies at the Public Utility Research Center at the University of Florida in Gainesville, said in an interview before the decision was handed down that an affirmation would permit utilities to keep investing in nuclear projects and seek approval from the Public Service Commission to recoup the costs.

The case is Southern Alliance for Clean Energy v. Graham, SC12-1987, Florida Supreme Court (Tallahassee).

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net

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