Local News
4:19 pm
Tue February 5, 2013

Duke To Permanently Shutter Troubled Nuclear Plant In Florida

Duke Energy says it will shut down the Crystal River Nuclear Plant in Florida, rather than spend billions repairing it.
Credit Duke-energy.com

Duke Energy says it will close down a troubled nuclear plant in Florida – called Crystal River – rather than try to repair it at a cost of billions.  Making that decision has preoccupied Duke and its investors ever since the company merged with Progress Energy and inherited the Florida plant.  

"From the beginning of the merged company, the resolution of the nuclear plant issue has been among the company's top priorities, if not the company's top priority," says Duke Energy spokesman Mike Hughes. 

All Things Considered host Mark Rumsey spoke with WFAE reporter Julie Rose to put the decision in context for North Carolina.

RUMSEY: Julie – to set the stage briefly, what happened to the Crystal River nuclear plant?

ROSE: About four years ago, Progress Energy tried to make some repairs that ended up causing more damage. The plant's been offline ever since. Progress hasn't really taken responsibility for the mistakes in that process, but the Tampa Bay Times did an investigation and found the company tried to cut costs by doing the repair on its own, rather than bring in the experts who typically handle these repairs.  Duke estimates it could cost more than $3 billion to fix the plant. Which brings us to today's decision to shut Crystal River permanently.  

RUMSEY: But walking away from the plant must have costs, too?

ROSE: Sure. The decommissioning will cost hundreds of millions of dollars, which Duke says it already has squirreled away in a fund mandated by the federal government. And there's a human cost, too, in terms of the several hundred people who work at the plant in tiny Citrus County, Florida and will be out of a job.  And then there's the fact that Duke and Progress have already sunk more than $1.6 billion into this nuclear plant it's now going to abandon. But – and here's what really irks folks in Florida – Progress Energy's customers are on the hook for much of that money.

RUMSEY: Even if they're no longer benefiting from the electricity?

ROSE: Yep. That was agreed to in a settlement with state regulators last year. Florida has some laws that let utilities like Progress pass a lot of nuclear costs on to customers. Back in 2006, the state decided to let utility companies automatically raise rates to cover the cost of planning and constructing nuclear plants – whether or not those plants ever benefit customers.  You can imagine that's not a very popular law in Florida right now. Here's State Representative Mike Fasano:

FASANO "It is, in my opinion, a scheme that Bernie Madoff would be extremely proud of Progress Energy/Duke. People here in Florida have put out hundreds of millions of dollars and have seen no benefits for any nuclear power plants yet to be built and probably never will be built."

He's referring there specifically to another nuclear plant Progress has been planning down in Florida but now put off indefinitely.  Fasano's tried several times to get the automatic rate hike law repealed. He thinks this Crystal River mess just might be the thing to get that done.

RUMSEY: Well, Duke and Progress have a couple of new nuclear plants in the planning stages in the Carolinas, too. Does North Carolina have a law like Florida's?

ROSE: No, but Duke has been asking for it. The company considers nuclear power a fundamental part of its business. These reactors crank out lots of cheap electricity without creating any greenhouse emissions – but getting them built is really expensive and takes a long, long time. That's why we need these automatic cost recovery laws, says Duke spokesman Mike Hughes.

HUGHES "I don't think any company is going to be in a position nowadays to put that kind of money at risk for many, many years without the expectation they will recoup those investments in real time."

RUMSEY: So what does this decision to close the Crystal River plant in Florida mean for Duke and Progress customers here in North Carolina? 

ROSE: Two things, really. First, the specter of it could prompt a repeal of that nuclear cost recovery law in Florida and make it harder for other states like North Carolina to justify passing one. And secondly, we could actually end up paying for it indirectly. Technically Duke can't charge customers in the Carolinas for problems with a plant in Florida. But the Duke/Progress merger means all of those operations are under one big corporate roof answering to the same shareholders. Here's how Jim Warren of NCWarn puts it.

WARREN: "When the holding company is bleeding badly in one state, there is pressure on Duke to recover more in terms of profits in its other states."

So yesterday, for example, Duke Energy made another request to raise rates in North Carolina because of upgrades and new power plants it's building in the state.  But that request also includes an 11.25 percent return on investment for shareholders – that's a number Duke basically negotiates with state regulators and it's not always clear exactly what goes into it.  In fact, the North Carolina Attorney General is currently challenging in court the rate of return Duke got in last year's rate hike. So we probably haven't heard the end of Crystal River.