Bloomberg News

Duke Says No Decision to Fix or Shut Florida Reactor

August 13, 2012

Duke Energy Corp. (DUK:US) hasn’t made a decision yet on whether to repair or retire its Crystal River 3 nuclear reactor, idle for almost three years after cracks were discovered.

The company is completing engineering studies, determining what it can recover from insurance and whether it will be able to renew the license for the plant, Duke Chairman and Chief Executive Officer Jim Rogers told the Florida Public Service Commission at a hearing in Tallahassee today. Rogers said on Aug. 2 that the cost of repairing the plant 80 miles (130 kilometers) north of Tampa, Florida, was “trending up” from a 2011 estimate of $900 million to $1.3 billion.

The state commission sought the briefing by Rogers on how the company’s acquisition of Progress Energy Inc. “will affect Florida consumers,” according to a July 17 press release. Charlotte, North Carolina-based Duke assumed control of Crystal River after completing its $17.8 billion purchase of Progress on July 2. The Florida commission’s approval wasn’t required for the acquisition.

Duke’s board voted to replace Progress CEO Bill Johnson as head of the combined company hours after the merger closed, in part because of questions about the reactor, Lead Director Ann Maynard Gray told North Carolina regulators at a July 20 testimony. Progress was “prejudiced” toward repairing the reactor, Gray said. She said Johnson delayed responses and failed to promptly report to the board communications with the plant’s insurer.

Johnson said he was fired because Duke had “buyer’s remorse” about the deal.

Insurance Mediation

Progress, the owner of utilities in Florida, North Carolina and South Carolina, said costs associated with the Crystal River plant reduced per-share earnings during the second quarter. The company has previously said the reactor would be able to resume operation in 2014 if regulators approve a repair plan.

Duke has entered into non-binding mediation with Nuclear Electric Insurance Ltd., which insures the reactor and is facing its biggest claim from Crystal River, Rogers said. That process is expected to take place in the fourth quarter.

The reactor’s license is set to expire in 2016. The company has asked the Nuclear Regulatory Commission to renew the license for another 20 years.

The silo-shaped concrete building that houses the Crystal River 3 reactor cracked in 2009 as crews replaced the steam generators, huge pipe assembles that transfer heat from the nuclear reactor to power-generating turbines. The building was patched and cracked again in March 2011 as workers tightened steel tendons intended to strengthen it.

To contact the reporter on this story: Jim Polson in Tallahassee, Florida, at jpolson@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net


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Companies Mentioned

  • DUK
    (Duke Energy Corp)
    • $72.61 USD
    • -0.18
    • -0.25%
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