Zapata says ‘worst case’ cost for Crystal River 3 is $3.43bn

While it is “technically feasible” to repair the Crystal River 3 nuclear plant in Florida, which has been idle since late 2009, it could come at a high cost for Duke Energy (NYSE: DUK).

That appears to be the bottom line from various documents made public during recent days by Duke subsidiary Progress Energy Florida (PEF). The utility said Oct. 1 that a technical review done in March by Zapata Inc. suggested that repairing the 860-MW nuclear unit could cost $1.49bn. There are also four coal-fired units at the same site that are not involved in this situation.

Duke, which merged with Progress Energy in July, has previously said that the repair cost could run from $900m to $1.3bn. More recently the company has said the costs are trending higher.

But in the Oct. 1 statement from PEF President Alex Glenn, the company acknowledges there is a “worst case scenario” where the cost could be $3.43bn with a 96-month work schedule.

Duke has said that it has not made a final decision on whether to try and repair the nuclear unit or replace it with some other type of power generation. Duke has said that it will proceed with repair only if there is a high degree of confidence that the repair can be done successfully and won’t bust the budget.

A Duke Energy spokesperson said Oct. 2 that the company does not have a firm deadline for making a decision on the future of Crystal River Unit 3. The company plans to let the data drive the decision timeline, the representative said.

Ratepayers in Florida, however, could be eligible for some sort of reimbursement if repairs on the plant don’t start by the end of 2012, the spokesperson said.

Duke CEO Jim Rogers has said that the company will be in negotiations this fall with its insurer, Nuclear Electric Insurance Limited (NEIL), about the company’s claim for Crystal River Unit 3.

The earlier cost estimates by Progress Energy and subsequently Duke were based on bids that Progress received from leading vendors – Bechtel and URS. Both are internationally-known firms. Progress Energy subsequently selected URS as the preferred vendor to do the repairs – provided that an engineering, procurement and construction (EPC) contract could be negotiated.

Significant risks and technical issues must be resolved, according to the Zapata review, made public in an Oct. 1 filing with the Florida Public Service Commission.

In March 2012, Progress Energy had hired Zapata to do an independent review of the potential work at the Crystal River nuclear unit. Zapata looked at a variety of issues, including whether modern computer modeling can accurately predict radial stress and potential additional concrete cracking in the building.

Progress had already sought NRC license renewal

The Crystal River operating license will expire in December 2016. Progress submitted a 20-year license renewal application to the Nuclear Regulatory Commission (NRC) in December 2008. That’s before the concrete cracking was discovered at the plant.

The Crystal River containment structure is about 42 inches thick and reinforced by both horizontal and vertical tensioned steel tendons and is lined on the inside with steel that is less than an inch thick.

The original delamination, or separation, in the concrete occurred in October 2009 while Progress Energy was replacing two 500-ton steam generators. The unit was shut down at the time for planned refueling and maintenance outage.

The uncertainty about the plant’s future comes as the Florida PSC has been considering the prudence of certain costs the company incurred in connection with a proposed 20-year license extension application for Crystal River 3 and a proposed power uprate for the plant.

The PSC had requested that the company share the analysis from Zapata.

According to testimony at hearings conducted earlier this year before the North Carolina Utilities Commission (NCUC), the troubles at Crystal River factored into the post-merger ouster of former Progress Energy CEO Bill Johnson just hours after he assumed the title of CEO for the combined Duke-Progress company.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.