Duke Energy Florida on Tuesday began seeking approval of a wide-ranging settlement agreement that would eliminate the possibility of building nuclear reactors in Levy County, boost solar-energy projects and help set base electricity rates for the coming years.
The settlement, filed at the Florida Public Service Commission, was reached with the state Office of Public Counsel, which represents consumers, and business and renewable-energy groups. If approved, it would resolve major issues for the state's second-largest utility — and put to rest the long-controversial nuclear project.
The package would scale back proposed bill increases for customers in 2018 and lead to increases of 1 to 3 percent a year from 2019 to 2021, Duke said.
“We're very excited about this for our customers and our state,” says Harry Sideris, the utility's state president.
Duke and the other parties, which include the Florida Retail Federation, the Florida Industrial Power Users Group, PCS Phosphate and the Southern Alliance for Clean Energy, are asking the Public Service Commission to hold a hearing on the settlement by Dec. 1 and approve it to take effect in January.
Among the key issues in the settlement:
LEVY NUCLEAR PROJECT: Duke announced in 2013 that it was shelving a plan to build the reactors in Levy County. But the utility left open the possibility that it could pursue a nuclear project in the future and obtained key licenses.
But under the settlement, Duke would not move forward with the project and would absorb about $150 million in remaining costs that otherwise could be passed along to customers. As an example, Duke this year filed a proposal with the Public Service Commission to recoup $81.9 million in costs from customers for the Levy project. Those costs would be absorbed by the utility in the settlement.
FUEL COSTS IN 2018: Duke recently filed a request with the Public Service Commission to recoup about $196 million from customers because of unanticipated costs for power-plant fuel. Costs of fuel such as natural gas and coal make up major parts of customers' monthly bills.
Under the settlement, Duke would be able to collect the $196 million from customers over two years — rather than all in 2018. That approach, sought by the utility, would help reduce the amount of increases customers would see in their bills next year.
SOLAR PROJECTS: Duke would commit to building about 175 megawatts a year of solar-generation projects for four years. The first 74.9-megawatt project is slated for about 550 acres of land in Hamilton County.
Sideris said Duke is in negotiations for other sites, though he said he could not disclose potential locations while the negotiations are ongoing. The utility will be able to seek future increases in base rates to pay for the solar facilities, starting in 2019, under the settlement.
BASE RATES: Proposals to increase utility base rates often lead to contentious, expensive cases at the Public Service Commission. The settlement includes $67 million a year in base-rate increases from 2019 to 2021 but would prevent Duke from coming back until at least 2021 to seek additional base-rate hikes.
A caveat is that costs for such things as the solar facilities would be added to base rates after the facilities are completed. The settlement also would allow a return on equity — a closely watched measure of profitability — of 10.5 percent for Duke.
Duke last week announced that customers' bills could go up about 8.5 percent in 2018, with a residential customer who uses 1,000 kilowatt hours of month expected to see a bill of $128.54. But Sideris said Tuesday the combination of ending the Levy nuclear project and spreading out the fuel costs would reduce that amount by about $5 a month.
The Southern Alliance for Clean Energy, which often battles with utilities, praised the settlement, pointing to Duke's commitment to add solar projects and undertake other initiatives, such as spending $8 million on a pilot program of electric-vehicle charging stations.
"We applaud Duke Energy Florida for working proactively with stakeholders to embrace smart technologies that are both good for consumers and the environment," Stephen A. Smith, executive director of the Southern Alliance for Clean Energy, said in a prepared statement. "Large scale solar, electric vehicles and battery storage demonstrate that Duke is embracing technologies for the 21st century.”