Columns

Why take risks if you can shift them?

By HOWARD TROXLER
Published April 17, 2007

Last year, our Legislature eased the rules for new nuclear plants in Florida.

Electric companies can now bill customers for new plants in advance. It's also easier to get permission to build them.

This law greatly benefited Progress Energy Florida, which wants a nuclear plant in Levy County. But it was of no use to Tampa Electric Co., which has no nukes.

On the other hand, TECO was planning a new unit at its Polk County site using "coal gasification." It turns the stuff to gas, which burns better and cleaner.

"Dear me!" the Tampa company sighed.

"Wouldn't it be great if the Legislature Fairy magically appeared and gave us a law letting us bill our customers in advance, too?"

Or something like that.

A year has passed, and the Legislature Fairy indeed has magically produced House Bill 549 and Senate Bill 1202, which do exactly that.

House Bill 549, by Rep. Trey Traviesa, R-Tampa, has sailed through its committees and is scheduled for a vote on the House floor as early as today.

Senate Bill 1202, by Sen. Mike Bennett, R-Bradenton, faces its last committee today before being scheduled for a floor vote. Neither bill has received any "no" votes.

The bills help Tampa Electric with its proposed Unit 6 at its Polk Power Station.

Polk Unit 6 will be a base-load, 630-megawatt plant. It's also going to be something called an "IGCC" plant. That stands for "integrated gasification, combined cycle."

It means the plant converts coal into gas before burning it, and recaptures part of the heat exhaust to generate even more electricity. Neat stuff.

But it's expensive, maybe $1.5-billion or more, and company officials say that without this help, the debt required would be immense, and the interest will cost customers even more in the long run.

There's another benefit - $133.5-million in tax credits if the plant is in service by the deadline, probably 2013.

"We think we really have a great opportunity for our customers here," spokesperson Laura Duda says.

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The philosophical problems are the same as for last year's law for nuclear plants.

This change shifts 100 percent of the risk from investors to customers, instead of reasonably sharing the risk.

A company could choose to abandon its plant at any stage without penalty - and still bill the customers for it all.

In theory, the Public Service Commission will conduct a review of whether the company was "prudent" in what it spent and billed to its customers. In practice, the rules are stacked in the company's favor.

As for the bigger picture, we now have had two years of the Legislature wading into the regulatory arena and setting energy policy piecemeal, based on which company manages to get a bill heard - Progress last year, TECO this year. Maybe Florida Power & Light will cook up one for 2008.

Scattershot bills passed with little debate, no opposition, benefiting one company at a time, and shifting billions in risk from investors to customers, is not the right way to do this.

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Howard Troxler posts bonus daily commentaries, reader reaction and updates online at TroxBlog. Go to www.tampabay.com and click on the "Blogs" link.

[Last modified April 17, 2007, 00:39:41]