Southern Alliance for Clean Energy v. Graham

113 So. 3d 742, 38 Fla. L. Weekly Supp. 267, 2013 WL 1830919, 2013 Fla. LEXIS 886
CourtSupreme Court of Florida
DecidedMay 2, 2013
DocketNo. SC11-2465
StatusPublished
Cited by11 cases

This text of 113 So. 3d 742 (Southern Alliance for Clean Energy v. Graham) is published on Counsel Stack Legal Research, covering Supreme Court of Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Southern Alliance for Clean Energy v. Graham, 113 So. 3d 742, 38 Fla. L. Weekly Supp. 267, 2013 WL 1830919, 2013 Fla. LEXIS 886 (Fla. 2013).

Opinion

PER CURIAM.

Southern Alliance for Clean Energy (SACE) appeals a final order of the Florida Public Service Commission (PSC) granting the petitions of Florida Power & Light Company and Progress Energy Florida, Inc. (respectively FPL and PEF, together “the utility companies”) to recover certain costs. Specifically, the final order authorizes the utility companies to recover through customer rates the pre-construction costs of their respective new nuclear power plant projects under section 866.93, Florida Statutes (2010). We have jurisdiction. See art. V, § 3(b)(2), Fla. Const.

SACE argues that section 366.93 unconstitutionally delegates legislative authority to the PSC and, alternatively, that the PSC’s order is arbitrary and unsupported by competent, substantial evidence. We reject both arguments and affirm. In so doing, we stress that “it is not this Court’s function to substitute its judgment for that of the Legislature as to the wisdom or policy of a particular statute.” State v. Rife, 789 So.2d 288, 292 (Fla.2001). 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.

I. FACTS

Utility companies are not normally allowed to recover from their customers the costs of constructing new power plants until after the plants have been completed and placed in commercial operation, whereupon the costs become part of the utility companies’ rate base. See In Re Nuclear Cost Recovery Clause, Docket No. 110009-EI, Order No. PSC-11-0547FOF-EI, 2011 WL 5904236, at *1 (F.P.S.C. Nov. 23, 2011) (“Final Order”). But the Legislature created an exception in 2006 to promote utility company investment in nuclear power plants. Specifically, the Legislature added section 403.519(4)(e), Florida Statutes (2006), to provide that

[a]fter a petition for determination of need for a nuclear power plant has been granted, the right of a utility to recover any costs incurred prior to commercial operation, including, but not limited to, [746]*746costs associated with the siting, design, licensing, or construction of the plant, ■ shall not be subject to challenge unless and only to the extent the [PSC] finds, based on a preponderance of the evidence adduced at a hearing before the commission under s. 120.57, that certain costs were imprudently incurred.

Ch.2006-230, § 43, at 2647, Laws of Fla. The Legislature simultaneously created section 366.93(2), Florida Statutes (2006), to direct the PSC to “establish, by rule, alternative cost recovery mechanisms for the recovery of costs incurred in the siting, design, licensing, and construction of a nuclear power plant.” Ch.2006-230, § 44(2), at 2648, Laws of Fla. The PSC in turn adopted Florida Administrative Code Rule 25-6.0423 in 2007 to implement the statute.

In 2008, the PSC granted the petitions for determination of need for new nuclear power plants proposed by FPL and PEF. The PSC has since issued orders granting the utility companies’ annual petitions for recovery of their associated preconstruction costs pursuant to the above provisions. In one such order, the PSC ruled that “a utility must continue to demonstrate its intent to build the nuclear power plant for which it seeks advance recovery of costs to be in compliance with Section 366.93, F.S.” In Re Nuclear Cost Recovery Clause, Docket No. 100009-EI, Order No. PSC-11-0095-FOF-EI, 2011 WL 365049, at *5 (F.P.S.C. Feb. 2, 2011).

In opposition to FPL and PEF’s most recent cost recovery petitions, SACE 1 argued that the utility companies’ respective preconstruction activities creating only an “option to build” (e.g., obtaining licenses and approvals necessary to construct and operate the plants, performing work needed to support environmental permitting, continuing relevant negotiations, etc.) did not demonstrate their “intent to build” as required under Order No. PSC-11-0095FOF-EI, reasoning that neither FPL nor PEF had actually committed to build the plants and that the projects were tentative and uncertain at best. See Final Order, 2011 WL 5904236, at *5-*6, *71-*74. The PSC rejected that argument and in its final order authorized the utility companies to include the nuclear cost recovery amounts of $196,088,824 (FPL) and $85,951,036 (PEF) in establishing their respective 2012 capacity cost recovery factors.2 See id. at *91. SACE now appeals.

II. ANALYSIS

Section 366.93, Florida Statutes (2010), is titled “[c]ost recovery for the siting, design, licensing, and construction of nuclear and integrated gasification combined cycle power plants,” and provides in pertinent part:

(1) As used in this section, the term:
(a) “Cost” includes, but is not limited to, all capital investments, including rate of return, any applicable taxes, and all expenses, including operation and maintenance expenses, related to or resulting from the siting, licensing, design, construction, or operation of the nuclear power plant, including new, expanded, or relocated electrical transmission lines or facilities of any size that are necessary [747]*747thereto, or of the integrated gasification combined cycle power plant.
[[Image here]]
(f) “Preconstruction” is that period of time after a site, including any related electrical transmission lines or facilities, has been selected through and including the date the utility completes site clearing work. Preconstruction costs shall be afforded deferred accounting treatment and shall accrue a carrying charge equal to the utility’s allowance for funds during construction (AFUDC) rate until recovered in rates.
(2) Within 6 months after the enactment of this act, the commission shall establish, by rule, alternative cost recovery mechanisms for the recovery of costs incurred in the siting, design, licensing, and construction of a nuclear power plant, including new, expanded, or relocated electrical transmission lines and facilities that are necessary thereto, or of an integrated gasification combined cycle power plant. Such mechanisms shall be designed to promote utility investment in nuclear or integrated gasifi-cation combined cycle power plants and allow for the recovery in rates of all prudently incurred costs and shall include, but not be limited to:
(a) Recovery through the capacity cost recovery clause of any preconstruction costs.
(b) Recovery through an incremental increase in the utility’s capacity cost recovery clause rates of the carrying costs on the utility’s projected construction cost balance associated with the nuclear or integrated gasification combined cycle power plant. To encourage investment and provide certainty, for nuclear or integrated gasification combined cycle power plant need petitions submitted on or before December 31, 2010, associated carrying costs shall be equal to the pretax AFUDC in effect upon this act becoming law.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Sierra Club v. Julie Imanuel Brown, etc.
243 So. 3d 903 (Supreme Court of Florida, 2018)
Citizens of the State of Florida v. Art Graham, etc.
213 So. 3d 703 (Supreme Court of Florida, 2017)
Smalley v. Duke Energy Florida, Inc.
154 So. 3d 439 (District Court of Appeal of Florida, 2014)
American Business USA Corp. v. Department of Revenue
151 So. 3d 67 (District Court of Appeal of Florida, 2014)

Cite This Page — Counsel Stack

Bluebook (online)
113 So. 3d 742, 38 Fla. L. Weekly Supp. 267, 2013 WL 1830919, 2013 Fla. LEXIS 886, Counsel Stack Legal Research, https://law.counselstack.com/opinion/southern-alliance-for-clean-energy-v-graham-fla-2013.