* Damaged Crystal River reactor in Florida shut since 2009
* Duke board ordered independent look at repair costs
* Insurance coverage not resolved, in mediation
By Eileen O'Grady
July 11 The likelihood that the damaged Crystal
River nuclear reactor in Florida will produce another megawatt
of electricity appears to have dimmed following the merger of
owner, Progress Energy, with Duke Energy, and the
surprise exit of Progress' top executive Bill Johnson, according
to testimony by Duke's chief executive Jim Rogers this week.
Charlotte, North Carolina-based Duke Energy became the
largest electric utility and second-largest nuclear operator in
the nation this week when it acquired Raleigh, N.C.-based
Progress Energy in a deal valued at $18 billion.
Crystal River's prolonged shutdown and issues at other
Progress-owned nuclear units played a role in Johnson's exit,
the man who had been slated to lead the merged company,
according to the testimony.
On Tuesday, Duke's Rogers told a special hearing called by
the North Carolina Utilities Commission to look into Johnson's
unexpected departure that Duke's board members had lost
confidence in Johnson's management style.
Duke board members voted to oust Johnson from the job of
chief executive of the merged company just hours after the deal
Johnson's departure may now put the restart of Crystal River
in doubt as he had been a strong proponent of repairing it.
Crystal River "is one area we had great concern about,"
Rogers said, citing insight gained from Duke director James
Rhodes, the retired chief executive of the Institute of Nuclear
Power Operations (INPO), a nuclear industry group that promotes
safety and reliability.
Progress' Florida unit, the state's second largest utility,
has been struggling since 2009 to return the 838-megawatt
Crystal River reactor to service after cracks began to be found
in the containment building's 42-inch (107 cm) thick walls.
A series of mistakes when the building wall was opened and
during initial repair work forced the utility to evaluate
whether it would make more sense to pursue a complicated repair
job or to shut the reactor permanently.
Rogers told North Carolina regulators that the board became
concerned that Progress' assessment of the risk and its estimate
of the cost to repair the damaged reactor building were not
realistic and ordered an independent analysis.
"We had expressed clearly to them that we really needed, as
a new board, to consider whether to retire or replace," Rogers
In quarterly earnings calls, Johnson expressed his desire to
try to return Crystal River to service sometime in 2014 at an
estimated cost of $1.3 billion, saying Progress planned to make
a presentation to the new Duke board after the merger.
On July 2, the same day Duke completed the merger, Progress
told its state regulators it had moved forward to select a
company to repair Crystal River "should the choice to repair
(the reactor building) be made," in a status filing.
Rogers also revealed that ongoing talks with Nuclear
Electric Insurance Limited (NEIL), an industry-sponsored
insurance fund, on Crystal River claims had not been resolved,
but had shifted into a mediation phase. According to Progress
filings, NEIL stopped making payments in May 2011.
An official with Florida's Office of Public Counsel, an
agency that represents consumers interests in state utility
proceedings, said he was "gravely concerned" about Rogers'
comments regarding Crystal River's future.
The agency believed that Johnson, as CEO of the merged
company, "would diligently pursue all reasonable avenues of
repairing and successfully returning (Crystal River) to service
for the benefit of Florida customers," said Charles Rehwinkel,
deputy public counsel, in a statement.
"We further expected that Duke, under Johnson's leadership,
would aggressively pursue collection of the full amount of
coverage for repair and replacement power costs under the NEIL
insurance policy that Florida customers have paid the premiums
for over the past 30 or so years," he added.
As of March 31, Progress had spent $506 million to replace
lost generation from Crystal River and $279 million on repairs.
It has recovered $162 million in replacement power costs and
$143 million in repair costs from NEIL, according to filings.
Rogers also said Duke board members expressed concern about
a "lack of sufficient improvement" at Progress' Brunswick
reactors which have been under increased safety monitoring by
the U.S. Nuclear Regulatory Commission.
An NRC spokesman said problems that have led to increased
scrutiny at the plants operated by Progress were unrelated.
"We've seen no indication that the overall management of the
Progress nuclear fleet is deficient," said Roger Hannah of the
NRC regional office in Atlanta.
Rogers told the North Carolina commission Duke will "pour
money" into Progress' operating reactors to "bring them back to
He made no such commitment for Crystal River.