TALLAHASSEE — Citing the lowest rate ever on rate reduction bonds, the Florida Public Service Commission (PSC) on June 16 authorized the issuance of $1.294 billion in nuclear asset-recovery bonds to cover the retirement costs of Duke Energy Florida, LLC’s (DEF) Crystal River III (CR3) nuclear power plant.
The bonds are expected to save DEF customers $684 million.
Customers will now see an initial $2.87 charge on a 1,000 kWh-per-month residential customer’s bill compared to the traditional rate base method of recovery, which would have resulted in a charge of approximately $5.00
The PSC was advised by Joseph Fichera of Saber Partners, LLC and Dean Criddle of Orrick, Herrington & Sutcliffe LLP on this important bond transaction.
PSC Chairman Julie Brown said, “The rate reduction bonds, the lowest ever, will save Duke customers hundreds of millions of dollars in the long run, as envisioned by the Legislature.”
In 2015, the Florida Legislature passed, and Governor Scott signed into law, Section 366.95, F.S., authorizing the issuance of nuclear-asset recovery bonds. This past November, the PSC issued a nuclear-asset recovery bond financing order, authorizing DEF to issue the bonds to cover the CR3 retirement costs and, ultimately, lower customer bills.
Last July, DEF filed its petition with the PSC for approval to issue the bonds and to collect the nuclear-asset recovery charge on a per kWh basis from all customer rate classes over a period of 20 years. The nuclear asset recovery charge will be paid by all existing and future customers receiving transmission or distribution services from DEF. The funds DEF receives will allow it to recover its investment in the CR3 regulatory asset.
Parties agreeing on the financing issues included DEF, the Office of Public Counsel, Florida Industrial Power Users Group, PCS Phosphate, and the Florida Retail Federation.