In a move to save consumers millions of dollars, the Florida Public Service Commission (PSC) today approved the settlement of all cost-related issues to retire Duke Energy Florida, LLC’s (DEF) Crystal River III (CR3) nuclear power plant. Commissioners are expected to review and decide on a final financing order in November.
The securitization financing order, if approved, allows DEF to issue approximately $1.3 billion in bonds to cover CR3 retirement costs and, ultimately, lower customer bills. The utility has estimated that, by lowering interest costs, the order decreases the 20-year overall customer cost by about $600 million. Based on those numbers, a 1,000 kWh-per-month residential customer’s bill would see an estimated $2.42 reduction compared to the traditional rate base method of recovery.
This year, the Florida Legislature passed a law allowing DEF to securitize its asset recovery. DEF expects to offer the Nuclear Asset Recovery Bonds to investors via a public offering registered with the Securities and Exchange Commission, which is typical of utility securitizations.
On July 27, DEF filed its plan with the PSC to assess customer fees for up to 20 years and sell this income stream to a “special purpose entity” that will use the fees as collateral for bonds. The nuclear asset recovery charge will be paid by all existing and future customers receiving transmission or distribution services from DEF. The funds Duke receives will be used to recover the amount of the CR3 regulatory asset.
Parties agreeing on the financing issues include DEF, the Office of Public Counsel, Florida Industrial Power Users Group, PCS Phosphate, and the Florida Retail Federation. With all issues settled, this week’s hearing concluded today.
The PSC selected Saber Partners to advise on this bond transaction. The firm also assisted the Commission on the nation’s first “hurricane-recovery securitization” for Florida Power & Light Company in 2006.
DEF serves approximately 1.7 million retail customers in Florida.
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