Duke Energy sees Crystal River 3 decision by summer

Mediation talks are continuing between Duke Energy (NYSE: DUK) and its insurer for the Crystal River 3 nuclear plant in Florida, and the talks could influence Duke’s decision on whether to repair the facility that has been offline since late 2009.

John Burnett, an official with Duke’s Progress Energy Florida (PEF) told the Florida Public Service Commission Jan. 7 that a couple of mediation sessions have occurred between the company and Nuclear Electric Insurance Ltd. (NEIL).

Due to confidentiality agreements, the PEF official said he could not reveal any specifics about meditation. But Burnett said that no impasse has been declared in the mediation effort.

Duke’s arrangement with NEIL calls for arbitration to result if they are unable to resolve NEIL liability to Duke via mediation.

The utility official also again said it could be summer before a decision is made on whether to implement costly repairs at the 860-MW nuclear unit or merely retire it and replace its generation from other sources.

PEF’s Burnett appeared during a PSC status conference on Crystal River 3. The meeting was webcast and a PSC official noted that the session was not a hearing on repair-versus-retirement.

In 2009, during a maintenance and upgrade project, a crack occurred in the concrete containment building that surrounds CR3’s nuclear reactor. The unit has been in “safe shutdown” since then, Duke has said.

The extended outage also complicated the merger between Progress Energy, the plant’s former owner, and Duke.

Duke CEO Jim Rogers told the Florida PSC last August that the question of whether to try and repair Crystal River is intertwined with the insurance settlement from NEIL. “This is the largest claim they have ever had,” Rogers told the PSC at the time.

A report done for Duke by the Zapata consulting firm said that repairing the plant will likely cost in the neighborhood of $1.55bn. The “worst-case scenario,” if the scope of work is increased – including replacement of the “dome” – could put the expense at an estimated $3.43bn.

Duke has also acknowledged that failure to start repairs by the end of 2012 is expected to result in certain reimbursement for PEF ratepayers in Florida.

The Florida PSC docket number for the Crystal River 3 case is 100437- EI.

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.