BY MARK SCHUMANN
About the same time Florida Power & Light, the Orlando Utilities Commission and the City of Vero Beach announced the successful negotiation of power purchase agreements that paved the way for FPL to acquire Vero Electric, FPL slipped into the last sentence of a semi-annual PSC filing notice that it had also reached an agreement giving the OUC an option to buy into two new 1,100 megawatt nuclear reactors FPL proposes to build at its Turkey Point plant.
From the time FPL first announced plans to build Turkey Point units 6 and 7, the company has insisted there would be no opportunities for municipal utilities and electric cooperatives to share joint ownership in the project.
Because nuclear power plants are built with technology developed by the federal government, investor owned utilities such as FPL have been required by regulators to at least explore shared ownership options with other interested utilities, such as municipal electric system and electric cooperatives.
As an example of such joint ownership, through its membership in the Florida Municipal Power Agency, Vero Electric owns a fractional interest in FPL’s Saint Lucie Two nuclear reactor. The purchase of that fractional interest by the FMPA was only made possible through court action the agency took against FPL, which to that point had refused to let other utilities buy into its Saint Lucie nuclear project.
Similarly, Florida’s municipal utilities had to appeal to the Florida Public Service Commission several years ago to force FPL to at least hold discussions with them about joint ownership in its proposed new Turkey Point reactors.
For more than two years, FPL has been under order by the PSC to communicate with any interested municipal utilities about possible joint ownership in Turkey Point units Six and Seven. Further, the PSC ordered FPL to provide a summary of these discussions twice a year.
To date, the essence of all these communications has been FPL’s insistence that it is simply too early to have specific discussions about what portion, if any, of the output capacity of Turkey Point units Six and Seven it will be willing and able to make available for joint ownership.
In its latest filing with the PSC on these joint ownership discussions, dated Oct. 1, 2012, FPL reported that a meeting was held in Orlando in early May with FPL and representatives from the FMPA, the OUC, the Jacksonville Electric Authority, the Seminole and Ocala Electric Cooperatives, Homestead Electric and Lakeland Electric.
In the last sentence of its Oct. 1, 2012 PSC filing, FPL reported, “Additional discussions were held with the OUC, and FPL and OUC have executed an option agreement for OUC’s potential participation in Turkey Point 6 & 7.”
If the option agreement executed between FPL and the OUC turns out to be a side deal, to the exclusion of other interested municipal utilities and cooperatives, some will surely wonder if the agreement has anything to do with the OUC’s willingness to take on Vero Electric’s FMPA entitlements in order to clear a path for the sale of Vero Electric to FPL.
If the option agreement between FPL and the OUC is in any way related to their power purchase agreement involving Vero Beach, questions will almost surely be raised about whether these agreements constitute an arms length transaction, as require by IRS guidelines.
Further, if the option agreement executed by the OUC and FPL for joint ownership in the proposed Turkey Point 6 and 7 nuclear units is in any way connected to FPL’s attempted purchase of Vero Electric, Federal regulators may see the offering of the option agreement as FPL’s way of flexing its muscle in order to expand its service area.
Indian River Guardian 
Congratulations on following the big money, Mr. Schumann! This is the kind of reporting that fills in the picture, and which is being ignored by other media. If you think this deal is “dead” owing to the contract obligations, take a look at this!! We are getting no real money for this valuable asset, but FPL knows what it’s doing.
The claim that nuclear power plants are built with “technology of the Federal government” is not entirely accurate. Nuclear power plants in this nation were built using either GE or Wesinghouse technology. The only role that the Federal government plays in the design is in ensuring compliance with its numerous rules and regulations that have been produced as a a reslt of lessons learned.
The private investor/Federal government alliance regarding nuclear power has a long history. In 1933 it was a private investor/Federal govenrment alliance that created the Tennesee Valley Authority which now provides electricity for over nine million people in seven states.
The copperation beween private investors and the Federal government
was again manifested when the Federal government sought to use the nuclear bomb as a means of ending WWII. There is an excellent book on this very topic titled, “Tuxedo Park” by Jennet Conat. Tuxedo Park was the geographical location of the wealthy industrials to formed an alliance out of their patriotic duty.
It would be very rare for any Federal regulator to get involved in an issue of ownership once a nuclear power plant has been built. The role of the U. S. Nuclear Regulatory Commission is to protect public health and safety. It has been the goal of the Federal government for decades to expand the use of nuclear technology for the production of energy. So it is highly improbable that the Federal government would have any quarrel with FP&L expansion of its servicce area.
Pat, the Atomic Energy Act, a federal law, is the fundamental law the governs the civilian and military uses of nuclear materials. This Act provides, among other things, for antitrust conditions to be placed on nuclear power plant licenses, which opened the way for greater participation by municipal electric utilities in nuclear power plants owned by investor-owned utilities.
I would call your attention to the following excerpt from an FMPA document titled, “Sum of Our Efforts 1974-2008.”
The technology for nuclear power plants was developed by the government in the Manhattan project and subsequently made available to private enterprise for commercial use. Since the government financed the technology, and since the only cost-effective nuclear plants must be large units, the federal government decided the benefits of nuclear power must be shared with public utilities. consequently, the atomic energy act provided for antitrust conditions to be placed on nuclear plant licenses, which opened the way for greater public power participation in nuclear projects.
A group of 20 Florida cities came together and asked for ownership interests in Fpl’s four nuclear units: two units at St. lucie and two at Turkey point. Fpl denied the request, so in 1974, the cities intervened in Fpl’s application for a license to construct St. lucie unit 2. in addition, the cities filed an antitrust lawsuit against FPL
In 1976, the nuclear regulatory commission ruled that the cities were not entitled to ownership interests in the Turkey point units and St. lucie unit 1 because these plants were already in operation. however, the commission did uphold the cities’ right to participate in the yet to be built St. lucie unit 2. This decision resolved the nuclear license intervention, but the antitrust lawsuit dragged on for several years.
I think that our communication problem has to do with nomenclature. I have never heard the term “technology of the Federal government” applied to nuclear energy. The summary of the Atomic Act that you provided is correct. However, that does not negate the fact that nuclear power was a joint creation between government and the free enterprise system. he space program is also a partnership of the govrnment and private enterprise but we never use the term “government aerospace technology.”Other innovations have been such things as medicine and computer technology. Yet we do not make reference to the government drug even though the research and develop efforts had its gensis in the Federal government. Likewise we do not identify the Internet as government technology even thougn the development funding came from the DOD research and development mission.
If there is indeed an anti-trust caveat involved in the same of the utillity, this is something that the highly paid transaction attorney should have previously identified. In years of public debate on the possible sale of the COVB utility, the issue of a possible anti-trust consideration has never been made public.
I am going to do more research on the Nuclear Regulatory Commission’s ruled and regulations on anti-trust issues. In my extensive experience at the NRC I never heard of any city filing a lawsuit in opposition to the builiding of a nuclear power plant.
The “communication problem,” as you describe it, has less to do with “nomenclature,” than it does with splitting hairs. The story read: “Because nuclear power plants are built with technology developed by the federal government.” I don’t know of anyone who thinks the Manhattan Project wasn’t substantially a government effort. We can debate this endlessly, the the facts are what the are.
Yes, the Manhattan project was an initiative of the Federal government. However, it did not produce “technology of the government” which is the phrase that I found troublesome in your initial article on the :nuclear option.” The expertise that allows nuclear power to produce energy is not the sole province of the government. The government is dependent on the free enterprise system to actually produce the energy consumers need.
Yes, it is universally acccepted that the Manhattan Project was a government effort. This is only because the general public was not taught in school that the great minds of non-Americans is what produced the final product.
Essentially the Manhattan project was the collaboration of both the private enterprise system and the government. Thus, it is a model for how we can solve problems in the 21st century. The government does not have all the solutions. Nor does the private enterprise system. The Manhattan project should be regard as a symbol of what is posisble with cooperative efforts.
The phrase “technology OF the government” does not appear in the story.
Beyond that, your perspective on the Manhattan Project doesn’t change one word of the Atomic Energy Act. Again,regardless of what you saw or did not see while working for the federal government, The Atomic Energy Act provides for antitrust conditions to be placed on nuclear power plant licenses, which opened the way for greater participation by municipal electric utilities in nuclear power plants owned by investor-owned utilities.