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Charge Off

Let’s say you own a successful car dealership. With each vehicle you sell, the customer is charged for access to a car wash on site whether they use it or not. Each month, whenever the customer pays their note, they are also paying for the car wash. One day, you decide to stop operating the car wash, yet the charge stays on customers’ bills each month. You tell your parent company that you are dropping the fee, but they deny your request. Are you surprised when customers take their business elsewhere?

This situation is similar to what is going on in Florida where a state House panel recently rejected Duke Energy’s request to drop a $3.45 nuclear power recovery fee off of ratepayers’ monthly bills. The fee was used to pay for two planned Westinghouse AP1000 reactors at a site in Levy County, which Duke canceled in August 2013. However, the utility continued to charge customers for the reactors. Obviously, customer outrage ensued, and Duke told Florida regulators earlier this month that it wanted to drop the fee, which the panel denied. Regulators required Duke to refund $54 million in charges to customers since plans for the Levy County plant were canceled.

The situation could not happen at a worst time as four other AP1000 nuclear reactors under construction in Georgia and South Carolina are over budget and behind schedule. It will not help public opinion that says nuclear plants are too expensive and take too long to build despite their benefits. Add on that some customers are paying for a power plant to nowhere, and you’ve got a recipe for even more bad publicity.

Though the fee may drop off of bills by 2016, lawmakers should reverse their decision and remove the fee as soon as possible. If Duke decides to build the plant later on down the road (unlikely since it dropped the plans for cheaper natural gas), it could revisit the fee at that time. It’s not fair to customers who naturally don’t want to feel they are nickeled and dimed for nuclear, and probably do not already have a favorable opinion of nuclear when looking at the other U.S. projects. If not, they risk the wrath of customers and politicians who will look back at this incident when considering more nuclear in Florida in the future.

Edited to add that regulators did approve the proposal to drop the fee on April 16. The fee will end starting in May.