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A Project of The Annenberg Public Policy Center

Florida Surrogates Go Nuclear

Two well-heeled surrogates of Gov. Rick Scott and former Gov. Charlie Crist continue to pollute the Florida airwaves with misleading claims. This time they distort the facts of a state settlement last year with Duke Energy that will cost ratepayers $2.9 billion over 20 years.

The $2.9 billion is actually two pots of money: nearly $1.5 billion that will be charged to ratepayers for costs related to Duke’s decision last year to close the Crystal River nuclear plant, and $1.4 billion in so-called advance fees that were charged to ratepayers to build a new nuclear plant in Levy County (that was later canceled) and upgrade the existing Crystal River plant.

But NextGen Climate Action, a liberal group backing Crist for governor, and the Republican Party of Florida, which backs Scott, inaccurately conflate the costs of the two projects and blame the entire amount on other guy:

  • NextGen says in its TV ad that Florida was “fleeced” by Duke Energy, blaming Scott for “letting Duke keep collecting billions” because the governor’s appointees to the Public Service Commission approved the settlement. But it was Crist who approved the ill-fated Levy County plant in 2009 when he was governor, and it was former Gov. Jeb Bush who signed a law that the utility used to charge ratepayers advance fees for the never-built nuclear plant.
  • The state Republican Party responded with an ad that starts by replaying the first 10 seconds of the NextGen ad, and then says “Charlie Crist let it happen.” Crist did approve the Levy County plant, but as we already said the advance fees charged by Duke were made possible by a law signed by Bush.
  • The Republican ad also says that “Crist signed a law helping Duke get billions.” But the law Crist signed had very little impact on the cost Duke was allowed to recover for the two failed projects referenced in the ad.

NextGen’s ‘Shocking’ Claims

NextGen, the group financed by billionaire climate-change activist Tom Steyer, has jumped into the Florida governor’s race in a big way. And the Republican Party of Florida has leaped to Scott’s defense. We recently wrote about a back-and-forth between the two groups over oil drilling near the Everglades.

This time, NextGen attacks the Republican governor for the state Public Service Commission’s decision on Oct. 17, 2013 to approve a $5 billion settlement with Duke Energy.

The ad starts with a TV news reporter saying, “We Floridians are paying billions of dollars to the nation’s largest power company and getting nothing in return.” The ad’s narrator then says, “One defective power plant. Another never built. Florida Fleeced by Duke Energy. Rick Scott knew but he’s letting Duke keep collecting billions anyway.”

The ad then shows on the screen an excerpt from a Tampa Bay Times news story on the settlement: “Duke’s customers on the hook for up to $3.2 billion.” (The $3.2 billion estimate proved to be too high, as we’ll explain later.)

We asked NextGen for information to support the claims in the ad. “It was the Tampa Bay Times that said ‘Duke’s customers on the hook for up to $3.2 billion,’ and it was Rick Scott’s appointed Public Service Commission commissioners that voted for the settlement,” NextGen told us in a statement.

But it is not that simple. The facts show that decisions made by the last three administrations — including Crist’s — were responsible for a portion of the settlement, but no administration is responsible for all of it.

As we previously mentioned, there are two components of the settlement. Let’s first take the $1.4 billion in advance fees that Duke Energy (and its predecessor, Progress Energy) were allowed to charge its ratepayers for two simultaneous projects: construction of a new nuclear power plant in Levy County and repairs to the Crystal River plant.

Duke Energy this year canceled the Levy plant project and closed Crystal River after repairs failed — so the wasted money on these projects is a sore point with ratepayers, including the group “Stop Duke Rip Off.”

It was then-Gov. Jeb Bush who signed an energy bill in 2006 that changed state policy to allow utility companies to charge advance fees to help finance nuclear projects (known as the nuclear cost recovery clause). Bush issued a press release on June 19, 2006, to announce he signed the bill, but it made no mention of this major change in financing nuclear plants or even nuclear energy for that matter.

Tampa Bay Times business columnist Robert Trigaux on Aug. 9, 2013, wrote a column about the law headlined, “Who gets credit for nuclear advance fee law, one of worst in state history?” Trigaux said the Legislature passed the law in a “deceptive process,” quoting a state senator as saying “[there] was no mention of prepay costs recovery on the Senate floor.” He spread the blame around. “It’s tragic that in seven years, no Florida legislator, governor or member of the state Cabinet has summoned the public service spirit to repeal or even seriously amend this loser measure,” he wrote. (Both Crist and Scott amended the law, as we will discuss later, but neither repealed it.)

It was under this law that Progress Energy went to the Crist administration and proposed building a nuclear power plant in Levy County. Crist was governor of Florida from Jan. 2, 2007, to Jan. 4, 2011.

On Aug. 11, 2009, Crist and his Cabinet, in their roles as members of the Department of Environmental Protection’s siting board, approved the project. The siting certificate, signed by Crist, was issued Aug. 26, 2009. Crist was well aware that the law would allow Duke to charge ratepayers advance fees to pay for the plant. In a story on the day Crist approved the plant, the Herald-Tribune of Sarasota noted that Progress was seeking approval from the PSC to charge ratepayers for the Levy plant and quoted Crist as saying, “I would encourage the company to keep the rates as low as possible.”

Progress Energy (and later Duke Energy after a 2012 merger) was able to go to the Public Service Commission to get approval for the advance fees as permitted under law — a process that started under the Crist administration and continued under the Scott administration, according to Charles Rehwinkel, a deputy counsel at the Office of Public Counsel, which represents ratepayers in utility cases before the Public Service Commission.

“That amount did NOT emanate from the settlement,” Rehwinkel, referring to the $1.4 billion in advance fees, told us in an email. “As part of the settlement, we took dollars that the Commission had already approved under the advanced recovery law and addressed how they would be recovered (over what timeframe and at what price point).”

In other words, the $1.4 billion in advance fees was already approved by the PSC under Crist and Scott for projects Crist and his administration approved. For NextGen to say Scott allowed Duke to “keep collecting billions” ignores the arguably more important roles played by Bush and Crist in these failed projects.

(Rehwinkel told us the original $3.2 billion estimate included $1.8 billion in advance fees, but the company has provided updated information that puts the cost of the advance fees at $1.4 billion, reducing the total cost to ratepayers to $2.9 billion — not $3.2 billion. He said the $1.4 billion in advance fees included $1 billion for the now-canceled Levy plant and $350 million for repairs to close the Crystal River plant.)

As for the cost of closing the Crystal River plant, Rehwinkel told us that state regulators were merely following standard regulatory procedures when charging ratepayers $1.466 billion (see page 3 of the settlement) that allow utilities to recover expenses for plants that close but still have ongoing costs, such as debt payments and storage of spent nuclear fuel. He said the expected life of the plant was 40 years, but it was closed after 33 years.

So, although it happened on Scott’s watch, no governor is to blame for those costs.

One last thing about the NextGen ad. It implies that state regulators approved the settlement in exchange for $500,000 in campaign contributions that Scott received from Duke Energy and Progress Energy. We did find that the Progress Energy PAC gave $500,000 in two contributions to Scott’s political action committee Let’s Get to Work on Nov. 18, 2013, and Dec. 31, 2013. But NextGen provides no evidence that those contributions influenced the decision-making process.

When we asked for evidence, NextGen’s statement merely noted that the contributions came weeks after the PSC approved the settlement, saying “it’s up to Scott to answer for his campaign contributions.” That’s not how it works. The onus is on NextGen to back up a claim that, if true, would be a violation of law.

Republican Party of Florida Response

The state Republican Party responded with its own misleading ad.

The ad, called “Crist’s Giveaway,” replays the first 10 seconds of the NextGen ad. It, too, opens with a TV news reporter saying, “We Floridians are paying billions of dollars to the nation’s largest power company and getting nothing in return.” The ad’s narrator then says, “One defective power plant. Another never built.”

It then interrupts the NextGen narrative with these words: “Charlie Crist let it happen when he was governor. Crist made it easier for Duke Energy to take your money. Crist signed a law helping Duke get billions, while Rick Scott put a stop to the Crist giveaway.”

The Republican Party says in its backup documents that Crist approved the Levy project — which is absolutely correct, as we noted earlier. That much is accurate. But, as we also noted, Progress and Duke charged ratepayers advance fees based on a law signed by Bush.

So, how did Duke Energy make it easier to “take your money” and what law did he sign that helped Duke “get billions” of dollars? The only support for that is a bill that Crist signed — HB 7135 — that amended the 2006 law signed by Bush. HB 7135 allowed related transmission costs to be included in the advance fees charged to ratepayers.

The only problem: The bill Crist signed had very little impact on the $2.9 billion settlement with Duke. The amount is in the tens of millions, not at all in the billions, Rehwinkel told us in an email. “I can unequivocally say that the HB 7135 transmission amendment did not impose billions of dollars of costs on customers in the form of advanced recovery as it turned out,” he said.

When we asked for an accounting of the billions of dollars mentioned in the ad, RPOF spokeswoman Susan Hepworth responded with an email that said: “Our ad makes ZERO reference to the settlement. We only refer to the law which Charlie Crist expanded that put taxpayers on the hook for the failed power plants.”

It’s just not accurate to say the Republican ad makes “zero reference” to the settlement. The ad clearly makes a reference to the settlement by showing a full third of the NextGen ad, which was all about the settlement. The narrator in the Republican ad even reads from the same script when she says, “One defective power plant. Another never built.” That’s a clear reference to Duke Energy’s two failed nuclear projects — the defective Crystal River plant that was closed and the Levy plant that was never built.

Secondly, the Republicans still did not provide any evidence that the law Crist signed helped Duke “get billions.”

The ad also says that “Rick Scott put a stop to the Crist giveaway.” It is true that Scott last year signed into law SB 1472, which amended the 2006 law signed by Bush. The law Scott signed requires utilities to begin construction within 10 years of obtaining a license in order to continuing charging the advance fee. Rehwinkel said the bill Scott signed forced Duke to cancel the Levy project and “stopped the bleeding.”

But Scott did not repeal the advance fee, which critics of the law wanted. The Tampa Bay Times editorial board called the changes to the law “tepid.” It said the bill didn’t go far enough and the law should have been repealed. The Southern Alliance for Clean Energy called the new law an “important step” but a “modest bill.”

There is plenty of blame to go around in this saga of the Progress Energy/Duke Energy nuclear plants. But the ads by both sides are simplistic and misleading when they point the finger in only one direction.

— Eugene Kiely