Duke Energy CEO Jim Rogers testimony to N.C. regulators didnt soothe Florida utility officials worried about the fate of a former Progress Energy nuclear plant thats been shut down for nearly three years.
Now the Florida Public Service Commission wants to hear for itself. The commission on Tuesday called Rogers to testify Aug. 13 on how Dukes merger with Progress will affect consumers there.
The focus will be on the 35-year-old Crystal River nuclear plant, which has been crippled since a project to replace key components, self-managed by Progress to save money, went wrong in 2009.
The Florida commission approved a settlement in February that outlines how Progress Energy Florida and its customers would share the costs of repairing the plant estimated at up to $1.3 billion or retiring it.
Commissioners want to ensure that Florida customers will continue to benefit from the agreement under the merged company, the commission said in a statement.
Rogers cited decision-making over Crystal River, including realistic assessments of the best way forward, among concerns his board had before asking former Progress chief Bill Johnson to resign.
Under Johnson, Progress had planned to repair the plant. Rogers testimony suggested that was a premature decision. Other alternatives include retiring or mothballing the plant.
Were very concerned because (Duke) seems to take the repair option off the table, said J.R. Kelly, who leads Floridas Office of Public Counsel, which advocates for utility customers.
Kellys staff believes customers will best benefit if the plant operates again, and struck Februarys deal with Progress on that basis. Unlike the expense of a new power plant, Crystal River generated electricity cheaply, he said. Retiring the plant would pass decommissioning costs, and the expense of building replacement plants, to consumers.
Progress had hired a Chicago engineering firm, Sargent & Lundy, to further analyze the repairs, Kelly said. The February settlement says Progress would owe $100 million to ratepayers if repairs dont start by the end of the year.
Duke, meanwhile, commissioned an independent assessment that made directors question Progress push to repair the plant. The Florida commission requested but has not received a copy of the study.
Dukes North Carolina customers also have money at stake, says the N.C. Waste Awareness and Reduction Network.
The Durham group has warned of problems at Crystal River for months. At a minimum, the costs of Crystal River will lower Duke Energys bond ratings and increase the cost of borrowing for all capital projects. This will make projects in North Carolina more expensive to construct and raise rates, especially if Duke Energy carries out its current ambitious construction plans, WARN wrote the N.C. Utilities Commission last week.
No design or engineering contracts have been signed. The plants license expires in 2016 but Progress has asked that it be extended by 20 years. Nor could Duke be sure the problem wouldnt recur.
A lot of analysis continues to be conducted at this time, Duke spokesman David Scanzoni said Tuesday. The company hopes to make a decision on the plant by late this year or early 2013.
A key unknown the extent to which insurance would cover a repair is in mediation.
Kelly said Rogers North Carolina testimony could weaken its position in negotiations with insurers.
Were concerned that some of the things Mr. Rogers said the other day may make the insurance company say theyre not going to repair and we dont have to negotiate anymore, he said.
Cutting into containment
The problem at the 860-megawatt Crystal River began nearly three years ago, when Progress cut an opening 25 feet by 27 feet through the 42-inch-thick concrete and steel wall of the reactors containment structure.
Cutting the 5-inch steel tendons that encircle the structure made the outer layer of concrete separate from the inner portion, the Nuclear Regulatory Commission concluded. Repairs were made, but concrete then failed in other parts of the structure twice in 2011.
Through March, Progress had already spent $425 million, including insurance payments, on repairs and buying replacement power that it will try to recover from customers.
Nuclear Electric Insurance Limited covered the first concrete failure but balked at paying for the second one. In March, Progress reported that it was not probable that NEIL will voluntarily pay the full coverage amounts we believe they owe.
Other utilities have successfully replaced steam generators by going through containment structures, said Ajaya Gupta, a professor emeritus of structural engineering at N.C. State University and an expert on the structural safety of nuclear plants.
It is conceivable that it can be fixed, Gupta said of Crystal River. Different kinds of structures are repaired, and its always possible that it cannot be repaired easily or that the cost of repair is more than the cost of rebuilding it.
While the cracks were discovered during and after repair work at Crystal River, Gupta said they were probably a sign of something that was already wrong in the prior construction decades ago.
The Union of Concerned Scientists, a nuclear power watchdog group, believes Crystal River can be safely if not cheaply fixed.
David Lochbaum, the unions nuclear-safety director, said the NRC has sought expertise from the National Institute of Standards and Technology. Experts also have experience with concrete problems at other plants, including Davis-Besse in Ohio and Seabrook in New Hampshire.
The capacity factor
Rogers testimony last week hinted at the Duke boards discontent with other facets of the Progress nuclear fleet, including lack of sufficient improvement in the operating results of the plants.
A widely-used benchmark of nuclear performance is called capacity factor a plants actual output as a percentage of its theoretical capacity.
Duke averaged a factor of 93.4 percent from 2007 through 2011, compared to the industry average of 90.6 percent. Progress plants, not counting Crystal River since its shutdown, came in just below the industry average at 90.4 percent.
Duke had a good reputation for a number of years but in the last decade or so, other companies upped their game, said Lochbaum. Duke sort of improved their game but not at the same rate.
Progress, he added, has a middling reputation in the industry that didnt rank with Dukes but wasnt at the bottom, either.
Three former Progress reactors, Crystal River and both units at the Brunswick plant near Southport, are under heightened federal oversight because of problems discovered there. Progress also shuffled management at its Robinson nuclear plant near Hartsville, S.C., in 2010 after a series of incidents forced the plant to shut down.
All three reactors at Dukes oldest plant, Oconee in upstate South Carolina, are also getting extra scrutiny from the NRC. Inspectors at Oconee last year found that, in certain accidents, an emergency shutdown system could fail.
Since 1996, the NRC has cited the five Progress reactors for 30 escalated enforcement actions. The seven Duke reactors have been cited 22 times.