A Duke Energy subsidiary will retire a crippled Florida nuclear plant that has been shut down since 2009, ending months of speculation over its fate, the company said Tuesday.
The Crystal River plant in Citrus County, Fla., is operated by Progress Energy Florida. A failed repair to its thick reactor containment building led to repeated problems with cracking concrete in the structure.
Duke cited differences with merger partner Progress Energy last year over Crystal River’s condition. Progress CEO Bill Johnson, who was fired as chief executive of the combined companies, had favored repairing the 36-year-old plant.
But a Duke-commissioned engineering report late last year concluded that, while repairs were feasible, they could cost up to $3.4 billion in a worst-case scenario.
The company did reach an agreement on insurance coverage for the plant, it said Tuesday. Nuclear Electric Insurance Ltd. had paid some claims but refused to pay others, and the dispute went to mediation.
Under terms of the mediator’s proposal, Duke said, NEIL will add $530 million to the $305 million it has already paid. It will be the largest payout in NEIL’s history, Duke said.
Duke said it may build a new power plant fueled by natural gas to replace Crystal River, to come online as soon as 2018, but is still evaluating where to build it.
Four coal-fired units still operate at the Crystal River site, but two of them will be retired within a few years.
“We believe the decision to retire the nuclear plant is in the best overall interests of our customers, investors, the state of Florida and our company,” Duke CEO Jim Rogers said in a statement. “This has been an arduous process of modeling, engineering, analysis and evaluation over many months. The decision was very difficult, but it is the right choice.”
The nuclear plant employs about 600 workers. Many will continue to work there as the plant is decommissioned, and Duke said it would try to place as many as possible elsewhere in the company.
Duke plans to place the plant in a “safe storage configuration,” requiring limited staffing to monitor plant conditions until it is dismantled and the site decontaminated. That could be in 40 to 60 years.
Repair risk seen as too great
Anti-nuclear activists praised the decision to mothball the plant and said it demonstrates that nuclear plants are too expensive and too risky.
“Crystal River clearly demonstrates the vulnerabilities of being overly dependent on a high-risk energy source like nuclear power, which exposes ratepayers to high financial risks and residents to unnecessary health and environmental risks,” Southern Alliance for Clean Energy said in a statement.
Utility analyst Hugh Wynne at Sanford C. Bernstein & Co. in New York said Duke’s decision was expected and makes sense given the costly experience of other electric utilities that have dealt with damaged nuclear plants.
Wynne said the risk of trying to repair the Crystal River plant was simply too great and could have resulted in unforeseeable delays and cost overruns.
Wynne also said the downside of walking away from the Crystal River plant is small. Progress Energy’s settlement with Florida regulators last year will allow the utility to charge customers for its uninsured costs in the idled nuclear plant.
Duke shares closed Tuesday at $68.88, up 53 cents. The (Raleigh) News & Observer contributed.