Will Class-Action Suit Help Duke, FPL Customers?

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Customers of Duke Energy and Florida Power & Light already know they got a bad deal when the Legislature let the power companies charge big money up front for nuclear projects — even ones that fail.

A law passed in 2006 allowed Duke to increase customers’ monthly bills to cover $1.2 billion in upgrades at its now-defunct Crystal River nuclear power plant and a proposed new nuclear plant in Levy County, which has now been shelved.

FPL was allowed to collect $814 million for nuclear projects, including two new reactors proposed for its Turkey Point plant near Homestead.

That’s a lot of money for projects that have either already been abandoned or still could be called off.

Now a big class-action law firm wants a piece of the pie.

Last month the Seattle-based firm Hagens Berman filed suit in federal court alleging the electric companies’ combined $2 billion in charges for the nuclear projects were unconstitutional.

A part of me that knows how unfair it was for utility customers — not the public companies’ shareholders — to get socked with these bills for years even after nuclear plans by Duke (then Progress Energy) fell apart wants to say, “Go, get ’em.”

Without a successful court case, customers have no hope of ever seeing a refund.

But another part questions whether a long and costly lawsuit will just continue to make customers pay. The utilities recover a large portion of their expenses through rates on monthly utility bills approved by the state’s Public Service Commission.

Class-action lawsuits typically come with big attorney fees.

An FPL spokesman told the Sun-Sentinel that the suit is “politically motivated litigation that will ultimately cost our taxpayers and our customers and put a heavy burden on state government.”

The same firm represented plaintiffs in the case against Toyota Motor Corp. over some models’ sudden, unintended acceleration.

The case resulted in a large settlement valued at about $1.6 billion, including $757 million in cash, according to a Bloomberg report.

But about 30 percent of the cash or $227 million went toward attorney fees.

Payments to individuals involved in the case ranged from about $10 to $10,000, Bloomberg reported.

Hagens Berman wouldn’t comment on the lawsuit against Duke and FPL other than its original press release.

“These two utilities have racked up huge expenses with nuclear power plant projects – some of which they completely abandoned – and have left ratepayers holding the bag,” said Steve Berman, managing partner of the firm, in the statement.

Berman is alleging that Florida’s “nuclear cost recovery” law is unconstitutional — and bear with me, this gets pretty wonky — because it violates the Commerce Clause and the Supremacy Clause.

Basically, the suit says the law discriminates against out-of-state electric companies as well as utilities that don’t use nuclear energy.

The Florida Supreme Court already upheld the law as constitutional when it was challenged recently on the grounds that the lawmakers shouldn’t have delegated their authority to the Public Service Commission.

And customers, who are represented in Tallahassee by the Office of Public Counsel, reached a settlement with the companies that was approved by the Public Service Commission.

Was the deal agreed to in 2013 perfect? No.

Does it include a refund for all the money customers paid on failed nuclear projects? No.

But the settlement did lower the amount customers would be on the hook for by about $1 billion. And the deal means Duke can’t raise customers’ base rates, which make up the bulk of customers’ utility charges, until after 2019.

The agreement also stopped the bleeding, so to speak, on the proposed new plant in Levy County, where costs were spiraling out of control before construction even started.

Perhaps a class-action lawsuit could turn out to be a win for customers. That will play out in court over time.

But a guaranteed win would be for the Legislature to repeal, not tweak as it has in the past, the 10-year-old law that essentially gave the utilities a blank check and left customers with the bill.

Source: www.orlandosentinel.com www.orlandosentinel.com

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