While a Duke Energy (NYSE: DUK) subsidiary has announced plans to retire the 860-MW Crystal River 3 (CR3) nuclear plant in Florida, it must still get state regulatory approval from the Public Service Commission.
But assuming the state won’t force Progress Energy Florida (PEF) to make the potentially multi-billion-dollar investment to repair cracks in the plant, which has been idle since fall 2009, the retirement raises several issues.
For example, there is the impact on Duke’s generation mix: According to 2012 figures, 16% of Duke’s owned capacity and 29% of Duke’s actual generation came from nuclear power.
Duke Energy Carolinas has a combined construction and operating license (COL) application pending with the Nuclear Regulatory Commission (NRC) for two power reactors at the undeveloped William States Lee site in Cherokee County, S.C. The application was filed in late 2007. To date the company has invested roughly $320m in planning and license preparation efforts, a Duke spokesperson said.
Duke has also been exploring taking a minority ownership stake in two new units being developed by SCANA (NYSE: SCG) at the V.C. Summer station in South Carolina. While no agreement has been reached, discussions are still continuing with SCANA’s minority partner, Santee Cooper.
Duke recently brought online new natural gas generation and some new coal generation in North Carolina. The company is expected to commission a coal gasification power plant in Indiana later this year.
Then there is the impact on the national nuclear fleet: With the CR3 announcement, three power reactors are now scheduled for retirement between now and 2019. Dominion (NYSE: D) plans to retire the Kewaunee plant in Wisconsin by the middle of this year. Exelon (NYSE: EXC) plans to retire the Oyster Creek plant in New Jersey until sometime in 2019.
NEI: Short-term means more CO2 emitting generation
Nuclear Energy Institute (NEI) spokesman Steve Kerekes called CR3 a unique situation that was decided by economics. “What it means is you are going to have more fossil fuel generation going on the electrical grid down there,” Kerekes said.
Duke has said it will take a hard look at adding more natural gas-fueled power to make up for the CR3 output. Since CR3 went offline in late 2009 the Florida generating mix has become more reliant on natural gas, Kerekes said.
Going to more natural gas-fueled power “is not a bad decision in the short term,” said Southern Alliance for Clean Energy (SACE) Executive Director Stephen Smith. Given that gas is so cheap, many power companies probably wish they were more dependent on natural gas, Smith said.
From a long-term perspective, Florida lacks detailed resource planning and is lagging behind other states in both energy efficiency and developing renewable power potential, Smith said during a conference call with reporters on CR3.
Smith faulted previous owner Progress Energy and the Florida PSC for contributing to the current situation at CR3. The advanced rate recovery that Florida officials have elected to provide nuclear projects figured into Progress Energy’s decision to replace the steam generators and seek a power uprate for CR3.
Progress Energy then did a poor job of executing the steam generator replacement in 2009 that preceded the delamination or cracking of the CR3 structure, Smith said.
“We applaud Duke Energy for taking decisive action today to permanently close the troubled Crystal River Nuclear Plant inherited as part of the Duke-Progress merger last summer,” said SACE’s Smith.
“Such decisive action now closes a financially tragic chapter in the history of nuclear power in Florida, one that has had devastating consequences for Florida ratepayers,” Smith said.
No date has been set for a Florida prudence review of Duke’s decision to retire the plant, said a PSC spokesperson. Other issues expected to come before the PSC in the coming months include the Duke subsidiary’s request for power purchase costs and other expenses that Duke’s insurer, Nuclear Electric Insurance Limited (NEIL) won’t provide.
Duke and NEIL have now resolved the company’s coverage claims through mediation. Under the terms of the mediator’s proposal, NEIL will pay an additional $530m.