In Southern Alliance for Clean Energy v. Graham, et al. (SC11-2465), the Florida Supreme Court considered the constitutionality of section 366.93, Florida Statutes, which authorizes the Public Services Commission (PSC) to allow a utility to recover preconstruction costs through customer rate increases to facilitate the construction of nuclear power plants. The case came to the Court on a challenge by the Southern Alliance for Clean Energy (SACE) of PSC final orders that authorized Florida Power and Light Company (FPL) and Progress Energy Florida, Inc. (PEF) to recover preconstruction costs for planned nuclear plants. SACE argued on appeal that the statute that authorizes preconstruction cost recovery is an unconstitutional delegation of legislative authority, and that the PSC in any case could not authorize rate increases to recover preconstruction costs for a utility that had merely been seeking permits to construct a plant, as that is not competent substantial evidence to demonstrate that there is an intent to actually construct a nuclear plant.

The Court started by examining section 366.93, F.S. The Court held that the statutory language that directs the PSC to establish cost recovery mechanisms “for the recovery of costs incurred in the siting, design, licensing, and construction of a nuclear power plant, including new expanded, or relocated electrical transmission lines and facilities that are necessary thereto, or of an integrated gasification combined cycle power plant” provides sufficient standards to determine if the PSC is complying with the statute. The Court noted that the statute only authorizes the PSC to allow the recovery of “prudently incurred costs.” While SACE argued that such language did not provide sufficient standards to provide any real guidance to implement the statutory mandate, and was therefore an improper delegation of legislative power, the Court disagreed, noting that statutes and caselaw have in many cases applied the prudence standard in the context of setting public utility rates.

The Court next examined whether the PSC could have found that FPL and PEF had demonstrated a sufficient intent to build to justify approval of preconstruction cost recovery. The Court noted that since such a finding of intent was a factual issue, SACE would have to show that there was no competent, substantial evidence to support the PSC’s finding if SACE was to prevail. As section 366.93 defined costs as expenses involved in “siting, licensing, design, construction, or operation of a plant”, the utilities would have a right to recover costs if they could establish any of those conditions. The Court concluded that the efforts of FPL and PEF to obtain necessary regulatory approval for the nuclear power plants provided sufficient evidence for the PSC to find an intent to build, and therefore, authorize cost recovery by the utilities.