During an Aug. 13 meeting with Florida Public Service Commission, Duke Energy (NYSE: DUK) CEO Jim Rogers discussed the future of an idle nuclear plant as well as well as his own future following the merger with Progress Energy.
After planning to retire from day-to-day operations and assume the role of Executive Chairman, Rogers agreed to step back in as CEO after the combined Duke board moved to force the resignation of Progress CEO Bill Johnson hours after the merger closed July 2.
In response to questions from the Florida PSC, Rogers said his current contract with Duke lasts into late 2013. “I’m going to serve as long as they want me to serve,” Rogers said, adding that he plans to leave the combined company stronger before turning it over to whoever follows him as chief executive.
Duke is committed to a “full and thorough review of the repair option,” at the 860-MW Crystal River nuclear plant, also known as Crystal River 3. Duke has not made a decision on whether to repair or retire the plant, which has been idle since a crack was discovered in the building in fall 2009 during a steam generator replacement project.
In addition to the usual engineering and risk assessment issues, Duke’s decision on how to proceed at Crystal River will be affected by ongoing mediation with Nuclear Electric Insurance Limited (NEIL) over what company expenses will be covered by the insurance, Rogers said. “This is the largest claim they have ever had,” Rogers said.
NEIL has set up a three-person panel to review the Crystal River claim and Rogers predicted that negotiations would be “tough.” A key issue will be how much NEIL will allow the company to recoup, Rogers said.
It has been estimated that costs could be $900m to $1.3bn, Rogers said.
Duke will have a report completed on Crystal River within a couple of months, Rogers said. “Crystal River 3 is a high priority for Duke, our customers and the communities we serve,” Rogers said.
Duke is continuing with a Nuclear Regulatory Commission (NRC) license application for a new nuclear plant in Levy County, Fla. Likewise, Duke will continue to study compliance options for two Crystal River fossil units, Rogers said.
The Duke CEO said that Florida accounts for 20% of the revenue for the combined Duke-Progress company. Despite rough times during the recession, Rogers expressed optimism about the long-term economic prospects of the state.
During his appearance before the Florida PSC, Rogers said that Duke has traditionally been ranked among the best utilities in the nation. Rogers also noted that this is the third utility merger he has played a role in.
Rogers appeared alongside Vincent M. Dolan, state president for Duke subsidiary Progress Energy Florida, who has announced he will retire by the end of 2012. Dolan’s successor, R. Alexander “Alex” Glenn, currently the Florida utility’s general counsel, was also on hand for the proceedings.