Thursday, December 14, 2017
Business

Deciding who pays repair bill could delay the reopening of the Crystal River nuclear plant

Progress Energy no longer thinks its insurer will "voluntarily pay" the full cost of repairing the broken Crystal River nuclear plant, a conclusion that will likely delay the reactor's return to service and potentially cost tens of millions of dollars in additional replacement power.

Progress had predicted the plant would come back online in 2014, at a cost of $2.5 billion for repairs and for making up for the lost electricity. But on Thursday, the company noted that the Nuclear Electric Insurance Limited had stopped paying claims in the first half of last year and still hasn't decided whether to cover the rest of the tab. Progress thinks the insurer should pay up; it's just not likely to happen soon.

It's not "probable that NEIL would voluntarily pay the full coverage amounts we believe they owe under the applicable insurance policies," Mark Mulhern, Progress' chief financial officer, said during a teleconference.

Charles Rehwinkel, deputy state public counsel, said the insurance company has essentially forced Progress to take the case to an arbitrator, and that will take months to sort through the details.

"It is virtually certain that 2014 will not happen," said Rehwinkel, who represents consumers before the Public Service Commission. "I think NEIL, they're faced with a claim that is far beyond anything they've contemplated they would ever have."

Rehwinkel said the best option for customers is for Progress to pursue repair of the nuclear plant because if they give up on it, "NEIL will be off the hook and won't pay."

The containment wall that houses the reactor cracked in 2009 as Progress Energy replaced steam generators at the Crystal River plant in Citrus County. It cracked two more times during repairs, creating one of the most costly nuclear plant accidents in U.S. history. Progress has had to purchase hundreds of millions of dollars of power to help replace what the plant would have been generating.

Mulhern and Progress chairman and CEO Bill Johnson said they remain optimistic that they will receive all of the insurance money due under the policy to repair the nuclear plant. Progress' policy allows up to $2.5 billion in repair costs per incident and $490 million in replacement power costs.

"We are in a process with them on the biggest and most complex claim they've ever had," Johnson told investors on Thursday. "We're still working positively and engaged with them."

Johnson said Progress continues to develop an engineering plan to repair the plant and expects to complete that process sometime during the second quarter of this year.

Progress will have to hurry as the clock is ticking on its move to repair the 36-year-old plant.

If the utility decides to repair Crystal River, it must begin the work before the end of the year, according to a settlement agreement Progress reached with the public counsel last month. If Progress does not meet that deadline, the company would add $100 million to the $288 million it has already pledged to refund customers.

If NEIL ultimately does not cover the repair costs, Progress would have few options other than to pass the billions of dollars on to customers or investors. The financial reality could force the company to permanently shut down or "decommission" its only nuclear power plant in Florida. In that scenario, the company has said it would need another major power source and would likely build a natural gas plant as an alternative.

During the earnings call, investors questioned Johnson and Mulhern about the appeal options if NEIL did not cover the repair costs and whether it would simply be better to close the plant.

"We have to get to a higher level of engineering and repair options," Johnson responded. "Sometime in the second quarter we will be at that spot."

The financial issues with Crystal River took a toll on Progress late last year with the settlement agreement dragging down the utility's earnings. Progress reported a $76 million loss in the fourth quarter.

For the full year, Progress' earnings totaled $575 million compared with $856 million the year earlier.

Johnson hopes to strengthen the company with the continued effort to merge with its neighboring North Carolina power company, Duke Energy. The two utilities said they hope a new proposal for the merger will satisfy federal regulators' concerns that the merger will adversely affect competition.

Ivan Penn can be reached at [email protected] or (727) 892-2332.

Comments
Be ready for busy roads and airports: 5.6 million Floridians to travel for the holidays

Be ready for busy roads and airports: 5.6 million Floridians to travel for the holidays

A record-breaking number of Americans are expected to travel during the holiday season next week, according to a AAA report released Thursday.The travel company projects 107.3 million Americans will pack their bags and leave their homes between Dec. ...
Updated: 16 minutes ago
Here’s who’ll benefit, and who might not, if net neutrality is repealed as expected

Here’s who’ll benefit, and who might not, if net neutrality is repealed as expected

WASHINGTON — The Federal Communications Commission is expected to repeal net neutrality rules Thursday, a move that will likely have major implications for internet service providers, startups and consumers.The hotly contested move centers on a set o...
Updated: 1 hour ago
Tampa chamber of commerce evolves to take on more policy challenges

Tampa chamber of commerce evolves to take on more policy challenges

TAMPA — A couple of the ways the Greater Tampa Chamber of Commerce has changed — evolved, really — will be on view today at the organization’s 132nd annual meeting at the Tampa Convention Center.But first, recall what the chamber used to be."A coffee...
Updated: 1 hour ago
Disney buying large part of 21st Century Fox in $52.4 billion deal

Disney buying large part of 21st Century Fox in $52.4 billion deal

NEW YORK — Disney is buying a large part of the Murdoch family’s 21st Century Fox for about $52.4 billion in stock, including film and television studios and cable and international TV businesses, as it tries to meet competition from technology compa...
Updated: 1 hour ago
Exploring the incredible color, cuisine, culture of India

Exploring the incredible color, cuisine, culture of India

DELHIAs I slid my shoes off and handed the man a five-rupee note before entering the Jama Masjid mosque, I could feel the heat from the red stone against my heels. I could also feel the intense stares of the Delhi locals. I don’t know which made me s...
Published: 12/14/17
Florida hospitals call for more funding in effort to address looming doctor shortage

Florida hospitals call for more funding in effort to address looming doctor shortage

The number of doctors practicing in Florida has not kept up with the state’s surging population growth, and more money is needed to recruit and keep them here, hospital leaders said Wednesday.The shortage is particularly acute in four speciality area...
Published: 12/13/17
Allegiant Air mechanics ask to be represented by Teamsters

Allegiant Air mechanics ask to be represented by Teamsters

Allegiant Air mechanics filed with the federal government Wednesday to be represented by the International Brotherhood of Teamsters. If the petition is passed, the union would negotiate on behalf of the mechanics and related technicians on issues suc...
Published: 12/13/17
Federal Reserve boosts key interest rate for third time this year

Federal Reserve boosts key interest rate for third time this year

WASHINGTON — The Federal Reserve is raising its benchmark interest rate for the third time this year, signaling its confidence that the U.S. economy remains on solid footing 8½ years after the end of the Great Recession. The Fed is lifting its short-...
Published: 12/13/17
Pasco Business Digest for Dec. 15

Pasco Business Digest for Dec. 15

Business digestWho’s newsHOSPITAL APPOINTS ASSISTANT CHIEF NURSING OFFICER: Registered nurse Courtney Stephenson, board certified nurse executive advanced, was recently appointed assistant chief nursing officer at Medical Center of Trinity. Stephenso...
Published: 12/13/17

Hernando Vendors for Dec. 15

Vendors are needed for the following nonprofit events:• Vendors and volunteers are being sought for a National Homeless Persons’ Memorial Day event from 8 a.m. to 3 p.m. Dec. 21 at Crescent Community Clinic, 5244 Commercial Way, Spring Hill. During t...
Published: 12/13/17