BY MARK SCHUMANN
In August 2012, Florida Power & Light, the Orlando Utilities Commission and the City of Vero Beach announced agreement on a complex, and in the minds of many, an improbable power purchase agreement. Aimed at clearing the way for the sale of Vero Electric to FPL, the deal is designed to relieve Vero Beach of its commitments to three FMPA power projects – St. Lucie Two, Stanton I and Stanton II.
The following month, FPL and the OUC signed off on an agreement giving the OUC the option to share in two new nuclear units FPL proposes to build at its Turkey Point plant in Dade County. Spokespersons for both FPL and the OUC insist there is no connection between the OUC’s participation in the power purchase agreements and FPL’s awarding of an as-yet exclusive option agreement on the Turkey Point project. In the minds of some in the the Florida municipal power industry, FPL and the OUC have some explaining to do.
Before Vero Beach can sell its electric system to FPL, it first had to find a qualified partner to assume is entitlements to the St. Lucie Two, Stanton I and Stanton II projects. In an attempt to unload these debt service obligations and power purchase commitments to the FMPA, Vero Beach had earlier appealed to all of FMPA’s members. But when it came to finding other cities willing to assume even fractional shares of Vero Beach’s obligations, the appeal led to little in the way of measurable results.
Late last spring, without other FMPA member cities willing to absorb Vero Beach’s power entitlements, the hoped-for sale of Vero Electric to FPL seems less probable with each passing day. By early summer, sources close to the negotiations were giving less than 50/50 odds that a deal could be worked out.
In early June of last year, Vero Beach City Councilman Craig Fletcher, apparently anxious about the prospects of reaching a deal, announced on a local radio program that he planned to ask the Council to begin studying its options. Fletcher reasoned that if a sale of the full system to FPL proved impossible, the city needed a “Plan B.” Curiously, less than a week later Fletcher withdrew his request from the Council’s agenda.
Even more curiously, Fletcher went cold on exploring alternatives to a sale of the full system just about the time FPL and the OUC began discussions on an option agreement enabling the OUC to buy into FPL’s new Turkey Point 6 and 7 nuclear project.
Somewhere between going public with his concerns that a deal to sell Vero Electric to FPL may not come together, and then withdrawing the subject from the Council’s agenda less than a week later, did Fletcher receive word the OUC and FPL were finally talking turkey?
Then, in early August came news that the OUC had agreed to facilitate FPL’s acquisition of Vero Electric by assuming Vero Beach’s multi-decade debt service obligation as well as its indefinite commitment to buy power from three FMPA projects. In exchange, the OUC is to receive $34 million in cash and an estimated $10 million in gas transmission rights, along with FPL’s guarantee to buy the power for three years.
An even more surprising announcement followed in October, when FPL reported to the Florida Public Service Commission that, in exchange for $10 (ten dollars), it has given the OUC an opportunity to participate in its proposed Turkey Point 6 & 7 nuclear project. The news appeared for the first time in the last paragraph of an otherwise routine semi-annual report submitted by FPL to the PSC last October.
The news of FPL’s side deal with the OUC remained buried at the bottom of FPL’s report to the PSC until late last January, when Inside Vero reported, “FPL and OUC sign ‘nuclear option’ agreement.”
Had FPL and the OUC hoped to keep quiet their side deal? One provision in the option agreement reads, “ Except as may be required by applicable law, the Parties shall not issue any press release or other public disclosure with respect to this Agreement or the transactions contemplated hereby without first affording the non-disclosing Parties the opportunity to review and comment on such press release or public disclosure.”
The revelation of FPL’s willingness to cooperate with the OUC on its new nuclear project came as a surprise to other municipal utilities and co-operatives, for they had also expressed an interest in buying into any expanded nuclear power output in Florida.
For the past several years, FPL has, at the insistence of the PSC, met semi-annually with representatives of municipal utilities, including the OUC, to update them on Turkey Point 6 & 7. At each meeting, FPL’s scripted message has remained the same. In the view of the utility giant, it was and is simply too early to begin specific conversations about what Turkey Point 6 & 7 power, if any, might be available for municipal utilities.
As it turned out, when FPL repeated this message to representatives of the state’s municipal utilities in the early fall of 2012, the company was, in fact, on the verge of revealing the OUC option agreement. A little more than one month earlier, FPL had announced successful conclusion of the Vero Beach power purchase agreement involving the OUC.
Spokespersons for both the OUC and FPL insist there is no connection between FPL’s readiness to offer Turkey Point power and the OUC’s assent to the power purchase agreements with FPL and Vero Beach. But some in the Florida municipal utility industry wonder if those explanations may not pass the sniff test.
After all, FPL’s discussions with the OUC for the option agreement on Turkey Point began about the same time the two utilities also got serious about finding a solution to Vero Beach’s FPMA commitments.
According to the billing records from Vero Beach’s transactional attorneys, negotiations with the OUC and FPL began in May and concluded in late July or early August. Essentially, then, discussions between FPL and the OUC for the power purchase agreements coincided with negotiations for the option agreement on Turkey Point.
Explaining the timing of the negotiations, Tim Trudell, a spokesman for the OUC, wrote, “Last summer FPL’s new CEO (Eric Silagy) visited Orlando. During the visit, after OUC asked about it – FPL suggested they would be willing to discuss an option for ownership (in Turkey Point 6 & 7).”
Last week, FPL spokesman Steven Scroggs met with representatives of the municipal utilities interested in Turkey Point, but this time the meeting was held via a conference call, rather than around a conference table. As Scroggs presented an update on Turkey Point, representatives of the municipal utilities remained more or less silent.
The conversation became more animated, though, when Scroggs attempted to explain how and why FPL cut a side deal with the OUC for an option on a five percent interest in the Turkey Point project. Scroggs said negotiations for the option agreement began in May, and at the OUC’s request.
Despite the concurrence of the negotiations for the Turkey Point option and the power purchase agreements, which are key to the sale of Vero Electric to FPL, both the OUC and FPL continue to maintain there is no connection between the two.
Last week, Inside Vero made a public records request of the OUC, asking for all documents relating to the OUC’s request for and negotiation of its option agreement for power from the proposed Turkey Point 6 & 7 units, including letters, emails, meeting notes and memos from or to any OUC employees or other persons acting on OUC’s behalf, as they would relate to the OUC’s request for and negotiation of its option to participate in FPL’s Turkey Point 6 & 7 plant.
In a May 22 email, Trudell explained that the OUC is “pulling the information together” and will be sending an estimate for the copying charges and a timeline for completion.
Whether the Turkey Point option agreement FPL gave the OUC for all of $10 (ten dollars) becomes relevant in the Department of Justice’s consideration of FPL’s proposed acquisition of Vero Electric only time will tell.
Indian River Guardian 
As a retiree from the U. S. Nuclear Regulatory Commission, it is my position that FP&L is engaging in wishful if they think that nuclear energy is going to a significant source of their future business plans.
The FP&L pursuit of more nuclear power capacity is particulaly curious in light of history. No entity has applied with the Nuclear Regulatory Commision to build a new nuclear facility since the Three Mile Island accident in March 1979. Subsequently there have been major accidents in Russia and Japan which makes the probability for a new nuclear power in the USA even more uncertain.
Additionally, the Department of Energy has made no progress in addressing the safe long-term storage of nuclear waste and despite considerabe political pressure from the Congress, there are no current viable plans on the horizon.
For those of us who want cleaner air through more emission-free energy, hopefully additional nuclear plants will come on line, particularly in Florida. The trend is favorable. Recently two of FPL’s existing nuclear plants were expanded through “extended power uprates” which are now producing an additional 500 megawatts of emissions free energy here. More is needed. Over the past 5 decades, nuclear energy provided the cleanest and most cost effective component of Florida’s electricity supply accounting for almost 20 percent of the overall portfolio. This percentage is down to about 12 percent because no new nuclear plants have been built for 25 years although our populations grew substantially since then.
Hopefully FPL’s proposed Turkey Point nuclear units will help correct this. Contrary to Pat Lavin’s comment, nuclear plants ARE being proposed here and in other states. In Georgia, for example, two new units at the Vogtle nuclear plant are already under construction. This will provide additional emission-free electricity here in the Southeast.
Lavins’ comments about accidents are not particularly applicable to plant designs here in America. Moreover, the comments about spent nuclear fuel are misplaced. Remember, all of the used nuclear fuel from America’s 103 nuclear plants continues to be securely stored and is ready to be recycled into new nuclear fuel using technology developed by American scientists and engineers but currently being used only in countries such as France and Japan which have governmental leadership that recognizes the value of recycling it. Hopefully America will follow soon.
Jerry Paul
Jerry Paul of Venice, Florida is a nuclear engineer, attorney and former member of the Florida Legislature. He was principal deputy administrator of the U.S. National Nuclear Security Administration and was the Distinguished Fellow for Energy Policy at the University of Tennessee Howard Baker Center for Public Policy. He is a contributing expert to the Energy Information Center (www.energyinfocenter.org). Contact him at jpaul@energyinfocenter.org.
Every one of Jerry Paul’s comments is factually correct with the exception of the use of nuclear power being cost effective. Nuclear energy is one of the most heavily subsidized energy sources because the taxpayers assume the full liability. This was the sole purpose of the Congress implementing the Price-Anderson Act. This legislation puts the burden on the American taxpayer in the event of a nuclear accident.
There is a long path between proposing a nuclear power plant and having one actually go operational and produce energy. Thus, it is unrealistic to dismiss the reality that no new nuclear power plant has gone on-line since the Three Mile Island accident
I continue to believe that it is unrealistically optimistic that there will be any new nuclear power plant going operational and producing energy in the foreseeable future. This is not because of the technical issues but rather the political and environment issues.
Spent fuel is a major obstacle because of the political environment that has existed since Nevada was selected as the repository. The issue of recycling has been studied by the NRC for decades and to date there is no viable proposal for long-term storage. There is no political will to expand the problem by allowing more nuclear capacity in this nation.
Nuclear energy technology is winning over long time adversaries that have objectively weighed the impact of nuclear energy on our society. Nuclear is the only deployable, compact, and economically competitive form of clean air energy that is truly needed to revolutionize the way we generate electricity. The accident in 3 Mile Island was a disaster, but it was also part of the first generation of nuclear facilities- and even then no member of the public was hurt.
Just like cell phones have evolved since they were created, so too has nuclear power generation technology. In the 43 year since the Three Mile Island facility was constructed, nuclear engineers have utilized new computing technologies and breakthroughs in nuclear physics and thermal hydraulics to make plants safe and more economically competitive. A new generation of nuclear plants is being built as we speak in Georgia. These plants can cool themselves down with absolutely zero power and provide thousands of megawatts of power without releasing harmful CO2 gases into the atmosphere. Small Modular Reactors that can make nuclear energy faster to deploy and can provide services like water desalinization are also in the horizon, and the Department of Energy has already pledged designers with their full support in the licensing process through the NRC.
The movie Pandora’s Promise, set to come out June 12th, follows the examples of prominent anti-nuclear environmentalists who have changed their mind about nuclear energy by analyzing the issue objectively and shaking off the social pressure to be anti-nuclear within the higher echelons of the environmental movement. They have found that nuclear is an irreplaceable weapon in the fight against climate change. I encourage everyone to go and see it.
I really hope Mr. Garcia is correct. However, in a May 3, 2016 article in the Palm Beach Post the following is recorded: “Florida Power & Light Co.’s quest to receive a federal license to build two nuclear reactors at its Turkey Point Power Plant has experienced yet another delay.”………..The reason FPL spokesman Peter Robbins said, is due to uncertainty related to the U.S. Nuclear Regulatory Commission requiring an evidentiary hearing on the proposed injection of reclaimed water into deep wells at the Turkey Point site in southern Miami-Dade County. Imagine, storing nuclear waste in deep wells – close to Florida’s drinking water. Research is needed to ascertain the results of this hearing.
It is past time that America takes a hard look at Nuclear Energy. Nuclear waste disposal is a huge problem – no, it is thee problem.
Following the Fukushima, Japan nuclear disaster, on March 11, 2011, Germany shut down 8 of its 17 operating reactors. And, in September, 2011, German engineering giant SIEMANS announced a complete withdrawal from the nuclear industry in response to the Fukushima Nuclear Disaster. There had been nuclear protests in Germany. Germans were remembering that large parts of Germany were contaminated with radio-active contamination from the Chernobyl nuclear disaster in 1986. Much of that area is uninhabitable – and will be for generations, plus costing billions of dollars in clean-up efforts and benefits to survivors.
Far from being driven by “social pressure,” those who are doubting the production of energy by nuclear energy have taken a hard look at the evidence, and determined that America, with its vast resources of natural gas, doesn’t need to go down that very risky nuclear path.
How do I know this? There has been a plethora of information from highly respected sources.
America should follow Germany, and get out of nuclear energy completely – the risks are just too great.
Anyone who believes this is a scare tactic, needs to do some homework!