TAMPA —
Progress Energy will try to repair its troubled nuclear power plant in Crystal River – at a cost of up to $1.3 billion – rather than closing it permanently, the company announced today.
The company had seriously considered decommissioning the plant, because of the staggering cost to repair its nuclear reactor building. Those problems have kept it sitting idle since September 2009.
However, the company on Monday said fixing the nuclear plant will save money in the long run because of the cheaper cost to produce nuclear energy. It hopes to have the power plant running again in 2014.
Progress Energy customers most likely were facing continued surcharges whatever decision the company made. The company already charges customers an extra $3.57 per 1,000 kilowatt hours of electricity to replace the power it's losing from the nuclear plant's shutdown.
The company probably will ask the state's Public Service Commission to let it continue charging customers for that replacement power for the next few years, predicted Charles Rehwinkel, an attorney who represents utility ratepayers before the PSC.
Ultimately, Progress Energy faced some very unappealing options, Rehwinkel said: try to fix a broken plant with no guarantee of success, or shut it down permanently, which might've cost over $1 billion.
"It's a very, very high-stakes decision that probably involves hundreds of millions of dollars," he said. "This is just a grim situation for the company and customers either way."
Progress Energy officials have been fretting over the Crystal River 3 nuclear facility for nearly two years. They were working on the reactor building in September 2009 when that work caused separation in its 42-inch-thick concrete walls.
Just when they were preparing to restart the nuclear plant this past spring they found a second area of separation in the concrete. The new problem was even worse, because some of the problematic concrete sits above the pools where Progress Energy stores its spent uranium fuel.
The company says it never posed a safety threat, but the location of separated concrete added to the repair cost, which now is thought to be $900 million to $1.3 billion.
Still, the company says repairing the reactor building is more cost-effective than decommissioning the plant, because nuclear fuel is so much cheaper than coal or natural gas.
"The Crystal River Nuclear Plant is our least-cost resource to operate, and with it in service, our customers save about $300 million a year in fuel costs," Vincent Dolan, Progress Energy Florida's chief executive officer, said in a prepared statement. "That translates to significant savings over the life of the plant."
Coincidentally, the Nuclear Regulatory Commission is having two public hearings on the nuclear plant today in Crystal River. Those hearings will address the environmental impact of giving Progress Energy another 20-year license to operate the reactor.
How much the company's decision affects customers will depend on an insurance company, Nuclear Electric Insurance Ltd., or NEIL. It is owned by utility companies with nuclear reactors.
Progress Energy has insurance covering up to $2.25 billion in property damages caused by accidents or other incidents, and another $490 million in coverage for the cost of buying or generating replacement electricity while the nuclear plant is down.
It's not clear yet how much of the repair and replacement electric costs NEIL will cover, said Suzanne Grant, a Progress Energy spokeswoman. As of May 31, Progress Energy had spent $214 million fixing the Crystal River nuclear plant and another $375 million on replacement power.
The insurance company reimbursed the company for about $265 million of those costs. The PSC allowed Progress Energy to charge customers for about $110 million in replacement power costs that it racked up during 2010.
The utility will need the PSC's permission if it wants to keep charging customers for replacement power until the nuclear plant is running again in 2014, said Rehwinkel, the lawyer for the Office of the Public Counsel.
