Duke sheds Levy nuclear equipment, battles with Westinghouse

Duke Energy Florida (DEF), which is a unit of Duke Energy (NYSE: DUK), plans to complete the sale this year of long-lead time equipment it had ordered for the shelved Levy nuclear project.

The company on May 1 petitioned the Florida Public Service Commission for the recovery in a Nuclear Cost Recovery Clause (NCRC) proceeding of its exit and wind-down costs for: the new Levy Units 1 and 2, each 1,100 MW in size; and for the Crystal River Unit 3 (CR3) Extended Power Uprate (EPU) Project.

Duke in 2013 decided to retire the damaged and already-shut, 860-MW Crystal River Unit 3, making the EPU project a moot point. DEF said it is entitled to recover $63.2m for the EPU through the Capacity Cost Recovery Clause (CCRC) during the period January-December 2015.

With the execution of a 2013 settlement agreement and approval by the commission in 2013, DEF elected not to complete construction of Levy Nuclear Units 1 and 2. DEF is implementing a wind-down plan for in-progress Levy Long Lead Equipment (LLE) and has “dispositioned” all LLE that was in active fabrication.

“DEF is soliciting internal and external interest in the acquisition of the remaining LLE,” said the application. “To this end, DEF is conducting a bid event for the remaining Levy LLE. DEF anticipates making final disposition decisions for the remaining Levy LLE by the end of 2014.”

Duke still in dispute with Westinghouse over contract termination

DEF also terminated the Engineering, Procurement, and Construction (EPC) agreement with a consortium Westinghouse Electric Co. LLC (WEC) and Stone & Webster Inc(S&W) in January 2014, under the terms of the EPC agreement. DEF continues to work with WEC in an attempt to close-out the contract, but to date negotiations are stalled, and both DEF and WEC have initiated litigation against the other for claims under the EPC agreement, Duke noted. DEF has, however, successfully negotiated a close-out of work with the other consortium member – S&W.

DEF plans to continue its Combined Operating License Application (COLA) work in order to obtain the Levy Combined Operating License (COL) from the Nuclear Regulatory Commission (NRC), as long as it is reasonable to do so, and DEF currently anticipates COL receipt in August 2015 based on the current NRC schedule.

DEF will continue to incur COL costs for Levy in 2014 and 2015, but under the 2013 settlement agreement, DEF will not seek to recover these costs from customers through the NCRC.

Mike Delowery, the acting Vice President of Duke Energy’s Project Management and Construction department, said about internal transfer of equipment: “A Duke Energy affiliate initially indicated that it may have interest in the acquisition of the EPU low pressure turbine rotors for one of its stations. This asset acquisition was evaluated and the Duke Energy affiliate concluded in 2014 that the equipment was not appropriate for the station. Additionally, in 2014 some minor EPU-related materials will be transferred internally pursuant to DEF’s policies. Other EPU equipment is currently under evaluation by Duke Energy affiliates.”

Delowery added that DEF currently plans to commence additional bid events for appropriate EPU-related equipment through an external bid process through the Power Advocate system in 2014. DEF initiated a bid event at the end of 2013 for the EPU Point of Discharge (POD) Cooling Tower equipment and materials. Bid responses were received in early 2014, and DEF is negotiating and finalizing a sales contract with an unnamed potential buyer. DEF expects to complete this negotiation process in May 2014.

Christopher Fallon, Duke Energy’s Vice President of Nuclear Development, said in May 1 testimony about the Levy-related talks with Westinghouse (WEC): “At present, WEC has granted DEF a revocable license to use WEC’s AP1000 proprietary data for the [Levy] COLA and DEF is working with WEC on an agreement for WEC’s continued COLA support work, which DEF needs to continue its work on the Levy COLA. WEC, however, may terminate at any time DEF’s right to use WEC’s proprietary AP1000 information for the Levy COLA. If WEC revokes DEF’s license to use the AP1000 data and WEC and DEF are unable to reach an agreement for WEC’s continued work to support the Levy COLA, DEF will be unable to obtain the Levy COL.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.