Boston (Platts)--4Oct2012/322 pm EDT/1922 GMT

Florida Supreme Court justices sharply questioned attorneys for both sides during oral arguments Thursday on a challenge to a state law allowing early cost recovery for nuclear projects, but they did not give strong hints on which way they may leaning.

Southern Alliance for Clean Energy last December challenged Florida's 2006 nuclear cost recovery law as unconstitutional, saying it delegates too much authority to the Public Service Commission without providing the agency with "adequate standards" to guide it in implementing the statute.

SACE also asked the court to overturn the PSC's November 2011 approval of $196 million in additional cost recovery for Florida Power & Light and $96 million in additional recovery for Progress Energy Florida. The environmental group said they utilities failed to prove they truly intend to build a four nuclear units for which they continue to recover licensing, site-planning and other costs.

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In oral arguments, several justices asked SACE attorney Gary Davis whether the law was not being implemented as intended and whether it would be appropriate for the court to overturn the law, even if the justices questioned the wisdom of charging utility customers for nuclear projects that may not be built.

The justices also asked attorneys for the PSC, FP&L and Progress whether there were any limits to nuclear recovery-related rate increases the PSC could approve, given that the law failed to include typical language about rates being "fair, just and reasonable."

PSC attorney Samantha Cibula said that the commission reviews FP&L's and Progress' nuclear plans and spending every year to determine if their proposed projects remain economically and technically feasible. That protects customers, she said.

To date, the PSC has approved more than $1 billion in early cost recovery for FP&L and Progress, though most of it is tied to uprates at FP&L's four existing nuclear units.

--Housley Carr, newsdesk@platts.com
--Edited by Jeff Barber, jeff_barber@platts.com

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