Duke will retire Crystal River nuclear unit; eyes more gas power

A Duke Energy (NYSE: DUK) subsidiary said Feb. 5 that it will retire the 860-MW Crystal River 3 (CR3) nuclear plant in Citrus County, Fla., and could replace its output with more natural gas generation.

The plant has been shut down and offline since late 2009, Duke’s Progress Energy Florida (PEF) said in a news release.

The company is reviewing alternatives to replace the power produced by the unit, including the potential construction of a new, natural gas-fueled plant.

A new power plant could come online as early as 2018 although Duke said there is no definitive plan for new generating capacity yet. The company is evaluating many potential sites for new plant capacity, including some in Citrus County.

The Crystal River energy complex’s four coal plants remain in service in Citrus County.

The fate of the Crystal River nuclear plant has been something of an open issue ever since Duke Energy merged with then CR3 owner, Progress Energy, in July 2012. Indeed, subsequent hearings and public filings about the merger revealed that Crystal River 3 was a troubling issue for the Duke board of directors.

A consultant’s report done for Duke, which was made public in the fall of 2012, suggested that repairing CR3 would probably cost $1.49bn, although the cost could amount to $3.43bn under a “worst case” scenario.

Insurance settlement reached for extra $530m

Only last month a PEF official said it could be the summer before Duke made a final decision on whether to retire CR3 or make the investment necessary to repair it. During his January appearance before the Florida Public Service Commission, the company official also said the Duke subsidiary was still in negotiations with its insurer, Nuclear Electric Insurance Ltd. (NEIL).

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.

Along with the $305m NEIL has already paid, customers will receive $835m in insurance proceeds. This will be the largest claim payout in the history of NEIL.

“We believe accepting the mediator’s proposal is in the overall best interests of our customers and shareholders, and the monies we receive will go directly to customers to reduce their electric bills,” said Duke Energy Chairman, President and CEO Jim Rogers said.

“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,” Rogers said. “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 Crystal River Nuclear Plant has been an important part of our generation fleet for three decades,” said Alex Glenn, state president, Progress Energy Florida. “We are very sensitive to the impact on our employees at the plant and on the Citrus County economy,” Glenn said.

The company’s decision comes after a months-long engineering analysis of the damaged CR3 containment structure. The nuclear unit, which began operating in 1977, had been shut down in the fall of 2009 for refueling and replacement of its steam generators when a delamination, or crack, occurred in the outer layer of the containment building’s concrete wall.

The process of repairing the damage and restoring the unit to service resulted in additional delaminations in other sections of the containment structure in 2011.

During the ensuing months, Progress Energy – and, more recently, Duke Energy – evaluated the ability to successfully repair the unit, the risks associated with any repair and the repair scope as well as the likely costs and schedule.

A report completed in late 2012 confirmed that repairing the plant was a viable option but that the nature and potential scope of repairs brought increased risks that could raise the cost dramatically and extend the schedule.

Attention shifts to retirement

About 600 full-time employees work at the Crystal River 3. Many will remain onsite to work through the closing and decommissioning of the unit. The company will work with employees to help as many as possible make the transition to positions in other Duke organizations.

The company is working to develop a comprehensive decommissioning plan. The plan will determine resource needs as well as the scope, schedule and other elements of the decommissioning.

The company intends to use the SAFSTOR option for decommissioning. Generally, this involves placing the facility into a safe storage configuration, requiring limited staffing to monitor plant conditions, until the eventual dismantling and decontamination activities occur, usually in 40 to 60 years.

Additional specifics about the decommissioning plan are being developed, Duke said.

Coal units not affected by CR3 news

As previously announced, the company expects to retire the two older coal-fired plants (units 1 and 2) in the coming years – most likely in the 2015-2018 time frame – due to changing federal regulations, “but there is no specific retirement plan for the units today,” Duke said.

The company has invested more than $1bn in recent years in adding advanced emission controls on the newer coal-fired plants (Crystal River units 4 and 5) and plans to continue to operate those units for many years to meet customer electricity demands.

Plant operators had long hoped to increase the generating capacity of the nuclear plant and the power uprate application was still pending with the U.S. Nuclear Regulatory Commission (NRC) as of last month.

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.