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Customers paying for Crystal River nuclear plant repairs should know the details

"This is a complex issue in a complex industry, and not one that can be sufficiently addressed through the media or other unconventional means."

Progress Energy Florida CEO Vincent Dolan in a Nov. 16, 2011, letter to Florida legislators about the broken Crystal River nuclear power plant.

"Pay no attention to that man behind the curtain."

Wizard of Oz, 1939.

• • •

When a CEO tells officials not to worry their pretty little heads over how his power company broke its nuclear power plant in Florida, I get concerned.

When a CEO who runs a monopoly in Florida states "we will not be sidetracked by the kinds of unsubstantiated claims, allegations and misinformation that can lead to media coverage lacking the full context of the issue," I get uneasy.

And when a CEO insists that "while some would have you believe we took an inappropriate approach to this work, nothing could be further from the truth" — well, even the Wizard of Oz would admire such brass.

Now, I happen to like Vincent Dolan. He's an emerging player among regional economic development leaders.

But his none-of-this-is-our-fault defense of the botched Crystal River nuclear plant project puts his credibility on the line.

I'm not a fan of letting any company off the hook that argues nuclear plant repairs are too complex for the media to report and inform the very public now picking up much of the tab. The stakes for nuclear power are simply too high, as we learned from this year's disaster at Japan's Fukushima nuclear power plant.

That's why Progress Energy's sidelined Crystal River plant — how it broke and why Floridians must pay for much of its repair — is this region's biggest business story of 2011.

Billions of dollars are involved. So are big politics, ranging from the regulatory gelding of the Florida Public Service Commission to the willingness of state legislators to accept corporate contributions and look the other way.

At the heart of this whodunit are questions of fairness and credibility. Who should pay? Why does a power company insist it bears so little responsibility? Breaking the Crystal River plant, CEO Dolan's letter claims, was "unforeseeable."

Really? Here are five pieces of "context" that, I suspect, Progress Energy would prefer ratepayers not consider:

1. The Crystal River nuclear power plant, in Citrus County, was shut down in September 2009. After a series of botched upgrade and repair efforts, it remains closed. It generates no electricity and probably won't until 2014, for a total of five years. That's hardly a management track record that any operator of a nuclear power plant should be proud of.

2. Progress Energy went against industry norms and decided on a cheaper do-it-yourself job to replace the plant's aging steam generators. It found a series of cracks after cutting a hole in the plant's concrete containment building that surrounds the nuclear power core. Progress Energy now says it will repair the containment building to the tune of at least $2.5 billion. The company says it expects to restart the Crystal River plant in 2014, nearly five years after it last produced power.

3. This fall, the St. Petersburg Times began running a series of detailed stories by reporter Ivan Penn about the Crystal River miscues. The stories do not rely on so-called "unsubstantiated claims, allegations and misinformation." They draw on depositions — legal testimony — from current and former Progress Energy employees, contractors and engineers. Many of them worked at the Crystal River plant. Some warned against Progress Energy's cutting a hole in the containment building instead of hiring an outside engineering firm experienced with this exact procedure.

4. For Progress Energy, it's key to win approval from Florida's typically compliant regulators to let the utility charge customers for some of costs required to fix the nuclear power plant and for the electricity purchased to replace the power no longer produced by the plant. Progress Energy rejects any notion that its shareholders should share the burden for the billions in extra costs.

That strategy must be working. Progress Energy's recent stock prices have never been higher. Who wouldn't invest in a company whose screw-ups are covered by customers?

5. Progress Energy Florida is owned by Progress Energy of Raleigh, N.C. That parent company is about to be acquired by Duke Energy, an even larger power company based in Charlotte, N.C. The deal will create the nation's largest power company and one of the biggest nuclear power businesses.

The merger is a big deal. It's not a good time for federal regulators or Wall Street analysts to raise fresh questions or assign blame in the bungled Crystal River nuclear repair.

One driving ambition behind the combination of Duke Energy and Progress Energy is to gain the clout to build and operate even greater numbers of nuclear power plants.

At Duke Energy, CEO Jim Rogers took the lead in wooing the Democratic National Convention to Charlotte next summer in a state critical to President Obama's re-election.

It so happens that the federal government, after dithering for years, again looks poised to renew its support (and loan guarantees) to build new nuclear power plants in the United States.

In Florida, Progress Energy says it wants to build a plant with two nuclear reactors in Levy County, just north of its Crystal River unit.

The Crystal River plant is hardly new. It's just a few years away from reaching its 40-year lifespan, when the industry originally intended to shut down and decommission its first-generation plants.

Now power companies want federal permission to continue operating their aging nuke plants for another 20 years. In Crystal River's case, that means extending the life of the plant from 2016 to 2036.

Here's the trick. Progress Energy says it will spend billions to fix its broken nuclear plant. But the company still lacks an explicit okay from the feds to run the plant until 2036.

Somehow I doubt federal approval will be a problem once Progress Energy and Duke merge to become the Big Kahuna of U.S. power companies.

But these are complex issues in a complex industry. Don't worry your pretty little head. Even if you're paying for it.

Contact Robert Trigaux at

Customers paying for Crystal River nuclear plant repairs should know the details 12/03/11 [Last modified: Saturday, December 3, 2011 3:31am]
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