Troubled Florida nuclear plant to close permanently
RALEIGH, N.C. — The largest U.S. electricity company said Tuesday it will permanently close a Florida nuclear power plant after botched repairs and use $835 million from an insurance settlement to refund consumers forced to pay for higher-cost replacement power.
But Charlotte-based Duke Energy also said it will seek to recoup from customers its $1.65 billion investment in the Crystal River Nuclear Plant, about 70 miles north of Tampa. The company said it is starting a closing process that may take 60 years before the nuclear site is decontaminated and dismantled and considering whether to build a natural-gas-fueled power plant to replace the power lost.
The nuclear plant operated by Duke Energy subsidiary Progress Energy Florida has been shut down since 2009, when its concrete containment building cracked during a maintenance and upgrade project. A 2011 repair attempt resulted in new cracks in other parts of the containment structure. Estimates put repair costs at between $1.3 billion and $3.4 billion.
The federal operating license for the nuclear plant, which began operating in 1977, was due to expire at the end of 2016, meaning Duke Energy would have had to wage a regulatory fight to extend its authority to operate.
“We believe the decision to retire the nuclear plant is in the best overall interests of our customers, investors, the state of Florida and our company,” Duke Energy Chairman and Chief Executive Jim Rogers said in a statement.
Duke Energy said in a filing with the Securities and Exchange Commission that it would seek to recover its investment in Crystal River over a 20-year period beginning in 2017, an amount spokesman Mike Hughes said was $1.65 billion.
Progress Energy Florida provides electricity to more than 1.6 million Florida customers, including the cities of St. Petersburg and Clearwater and the area surrounding Orlando.
Florida Public Counsel J.R. Kelly called the company's decision a bad one for consumers, who face the potential of higher rates to pay for more expensive alternate power sources. The settlement of Duke Energy's dispute with its insurer, Nuclear Electric Insurance Ltd., shortchanged ratepayers because the additional $530 million NEIL agreed to pay was less than half the lowest projected repair cost, said Jon Moyle Jr., a lawyer for the Florida Industrial Power Users Group, which advocates for manufacturers.
Florida utilities regulators will decide when customers see refunds to compensate for higher bills Progress Energy passed along because it had to replace electricity not produced by the nuclear plant with higher-priced power.
Florida's Public Service Commission last February allowed a $150 million increase in base rates but directed Progress Energy Florida to refund customers $288 million over two years for costs related to the nuclear plant shutdown. That money started to be included last month, Mike Hughes said. Another $100 million is due to customers in 2015 and 2016 because repairs on Crystal River had not begun by the end of 2012.
Duke Energy spent $338 million through the end of 2012 to repair the nuclear plant, $143 million of which was covered by payments by insurance. How much of the cost to close the plant will be covered by customers or absorbed by shareholders will be decided by Florida regulators, Hughes said.
“The ultimate allocation of those costs will be determined in the future, so I don't have any specific percentage that we anticipate that customers might pay, a specific percentage that we anticipate shareholders might pay. That will be determined by the proceedings” convened by state regulators, Hughes said.
The Nashville, Tenn.-based Southern Alliance for Clean Energy said it applauded Duke Energy for its decisive decision to close Crystal River.
“Crystal River clearly demonstrates the vulnerabilities of being overly dependent on a high-risk energy source like nuclear power, which exposes ratepayers to high financial risks and residents to unnecessary health and environmental risks,” Executive Director Dr. Stephen Smith said.
Duke Energy has 7.1 million customers in Florida, North Carolina, South Carolina, Ohio, Kentucky and Indiana.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Kennametal profit, sales improve in 1Q, but forecast reduced
- Highmark’s new REMWorks Sleep Store will sell sleep apnea equipment
- CCAC, Energy Innovation Center respond to energy industry’s growing demand
- Hedge funds sue to block EDMC deal
- Apple CEO Tim Cook: ‘I’m proud to be gay’
- Range Resources reports $146M in Q3 profits on record Marcellus production
- Profit falls at vitamin retailer GNC Holdings in third quarter
- Roundup: WesBanco to acquire ESB Financial for $324M; PNC to replace credit cards used during Home Depot breach; more
- Fed ends bond-buying program, keeps short-term rate near zero
- Marcellus shale boom lifts Civil & Environmental Consultants of Robinson
- World’s 1st carbon capture power plant switches on in Canada