Florida customers of Progress Energy could be on the hook for the growing repair costs to the Crystal River nuclear plant if the new owner decides to fix the faulty reactor without full coverage from its insurer.
Duke Energy CEO Jim Rogers told the Florida Public Service Commission on Monday that the Charlotte, N.C.-based companys $18 billion merger with Progress Energy could mean lower costs for 1.6 million consumers in Florida through bulk natural gas purchases, combined backroomservices and the ability to respond to disasters from crews now in six states.
However, Rogers said the energy giant continues to evaluate the fate of the Crystal River 3 plant, with a decision pending by the end of the year.
The decision could hinge upon the companys insurer, Nuclear Electric Insurance Limited, agreeing on how much of the work will be covered. The cost is estimated at $1.3 billion and growing.
Progress had spent $425 million through March on repairs and replacement power that are not covered by insurance and the two sides are contesting payments for two failures in the concrete amid the containment structure that occurred in the CR3 reactor. NEIL has been against paying for the two failures that occurred after the initial problems were reported.
Rogers told the commissioners that there would be an increased likelihood for the Crystal River reactor to be retired if NEIL doesnt pay. But if the companys board of directors decides to proceed, regardless of any mediated costs from NEIL, any difference would have to come from the utilitys consumers.
There is no single factor such as the insurance that will make a difference, its a combination of factors, Rogers said. What will the engineering study show? What is the risk assessment associated with it? Will our license be extended?
Were going to do what is best for the customers. Its a complex set of issues, but at the end of the day what is best for the customers is what were going to do.
The operating license for Crystal River, shut down since 2009, expires in 2016. Progress has filed for a 20-year extension.
State Sen. Charlie Dean, R-Inverness, said if the state should consider using pre-construction money that has been collected for Levy County nuclear plant, that may be more than a decade from going on line.
Since 2006, $936 million has been collected from Florida energy customers for nuclear plant construction, through legislative action, with the focus on the Levy County nuclear plant.
No one has ever gotten an approval on the Levy project, Dean said.
Rogers was appearing before the commission at the Florida panels request because of concerns about the impact to the companys customers in Florida.
Florida Commission Chairman Ronald Brise called the session a productive beginning."
Rogers said he isnt a prognosticator when it comes to a decision by the Duke board, but he did say that the industry will require all power plants to be replaced in the next 40 years.
Also, while the push is on to create reusables, such as wind and power, both that are prominent in Dukes portfolio, Rogers said Florida will continue to rely on natural gas, with coal still playing a big role up North, and nuclear power still having a role.
Reach Jim Turner at email@example.com or at (772) 215-9889.