Sunday, June 24, 2018
Business

Trigaux: Failed Florida nuclear plant's costs keep rising

The costs of prematurely closing Crystal River 3 — Duke Energy's sole nuclear power plant in Florida — keep on rising.

Duke Energy recently agreed to a settlement that sent at least $55 million to eight minority owners of "CR3." That's the nuke plant Duke closed last year due to a bungled do-it-yourself repair job that the power company finally acknowledged last year would prove too expensive to fix. The bigger settlement sums are going to minority investors like Ocala and the Orlando Utilities Commission. But even smaller towns like Bushnell and Alachua, with small stakes in CR3, will be compensated.

Another $8.4 million will go to nine wholesale customers with contracts to receive electricity from CR3. Those customers range from Homestead, south of Miami, to Bartow in Hillsborough County.

Total payout to minority owners and wholesale customers: $63.4 million.

The 860-megawatt Crystal River plant was expected to operate until 2036. Instead, CR3's concrete containment wall cracked in 2009. Never restarted, the plant is scheduled to be decommissioned over the next 60 years at a cost topping $1 billion.

The failure of the plant to provide electricity for another quarter century has sent ripples statewide. For instance:

• To make up for electricity lost from CR3, Duke now plans to build a new $1.5 billion natural gas plant in Crystal River. Electric rates are expected to keep rising to reflect these new costs.

• The loss of its sole nuclear power plant in Florida has pushed Duke Energy to sharply increase its reliance on natural gas as the primary fuel to generate electricity in the state. Recently proposed federal rules to further restrict air pollution are also pressing power companies to reduce their dependence on coal-fired power plants. That loss of diversity in fuel sources worries the power industry — and rate-sensitive consumers — should natural gas prices, now low, rise in the future.

• A number of smaller cities and municipal utilities agreed in the 1970s to become minority owners in the Crystal River plant. The idea was for smaller players, then dependent on oil-fired power plants and worried about Middle East oil prices, to gain access to a new source of generating electricity: nuclear power. Their stakes also helped offset some of the original cost overruns to build CR3 by its initial owner, Florida Power Corp. Since then, Florida Power has been absorbed via acquisitions by Duke Energy.

But the eight minority owners have not only sought compensation for the premature loss of their investment in the nuclear plant. They also want to be bought out to avoid any ongoing liability as part owner of CR3.

The recent settlement between Duke Energy and these various cities and smaller utilities was aided by the Florida Municipal Power Agency, an Orlando group owned by municipal electric utilities that helps manage electricity delivery.

FMPA's Mark McCain, assistant general manager, said that in normal economic times the Florida cities and utilities that had depended on CR3 for a portion of their power might have had to scramble for alternative sources. But CR3's demise coincided with a severe state recession that has decreased demand for electricity since 2008.

"We do not need to add more capacity at this time," McCain said. "But it was important for these cities and utilities to end their ownership and liabilities in Crystal River 3. This settlement transfers ownership back to Duke."

One more CR3 conflict resolved with big checks. They likely won't be the last.

Contact Robert Trigaux at [email protected] or (727) 893-8405. Follow him @venturetampabay.

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