Repairs to Crystal River nuclear plant could hit $3.4 billion

The Charlotte ObserverOctober 2, 2012 

Repairs to a crippled nuclear plant that was a key factor in the Duke Energy-Progress Energy merger tempest could cost up to $3.4 billion, more than double previous estimates, Duke said Monday.

The July 2 merger brought Progress’ Crystal River plant in Florida into Duke’s nuclear fleet. The plant has been shuttered since 2009, when a project to replace parts inside its thick reactor containment structure led to separating concrete.

Duke’s directors later said Crystal River contributed to their quick dismissal of former Progress Chief Executive Bill Johnson, who had been expected to lead the combined company. Two state probes of his dismissal are under way.

Duke now faces an increasingly vexing decision – whether to repair or retire the 35-year-old plant – that could cost both the company and the 1.6 million customers of its Progress Energy Florida subsidiary.

While Johnson had planned to fix Crystal River, an independent analysis commissioned by Duke before the merger, released Monday, says unforeseen problems could multiply repair costs.

Incoming Progress Energy Florida president Alex Glenn wrote the Florida Public Service Commission that the repair plan “appears to be technically feasible” but carries significant risks and unresolved technical issues.

“We will proceed with a repair option only if there is a high degree of confidence that the repair can be successfully completed and licensed within the final estimated costs and schedule, and is in the best interests of our customers, joint owners and investors,” Glenn wrote.

Progress last year put repair estimates at $900 million to $1.3 billion to replace the concrete in portions of the 42-inch-thick containment structure.

The new review by Zapata Inc., a Charlotte engineering firm, estimated costs at $1.49 billion, not far off the $1.55 billion bid of Progress contractor URS Corp. Duke hired Zapata in March, before the merger closed.

The estimates don’t include the $534 million Progress has already spent, through June, on repairs and on buying power while the plant isn’t operating.

Zapata said unforeseen problems, including additional damage to the structure during repairs, could push costs as high as $3.43 billion and take eight years to fix.

The plant has a history of unexpected problems. An initial concrete separation, or delamination, had been repaired in the containment structure when two more delaminations were found last year.

Risks now include whether more concrete, including the containment dome, will be damaged during repairs, the Zapata review found.

Replacing the dome and lower walls, which are not in the current repair plan, would add $1.9 billion to the costs, it said.

A looming factor in Duke’s repair-replace decision is how much Crystal River’s insurer would pay for repairs.

Costs of buying replacement power have already exceeded the $490 million in insurance coverage. The property damage limits are $2.25 billion. Insurer Nuclear Electric Insurance Ltd. paid all but $70 million of an initial claim but has balked at paying two further claims.

Duke CEO Jim Rogers, testifying before the Florida commission in August, said mediation with the insurer “is going to be tough and difficult.”

Florida Public Counsel J.R. Kelly, whose office advocates for consumers, said he viewed the new estimates with caution.

“While there’s a lot of information that we’ve got to study to really understand all the impacts, we do recognize the fact that this is a competing engineering firm asked to come in and take a critical eye at another engineering firm,” he said. “You do have to recognize that when you compare what one says to another.”

Kelly says the plant should be repaired because it is Progress Florida’s cheapest energy source and customers would have to pay for a new one. The plant also provides jobs and boosts the Citrus County tax base.

Under an agreement signed with the Public Service Commission earlier this year, Progress Florida would rebate $100 million to customers if repairs don’t start by the end of the year.

“The longer this seems to push it out, the more it favors a delay in that decision being made,” Kelly said.

Duke stock closed Monday at $64.38, down 41 cents.

McClatchy Washington Bureau is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service