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Duke Energy CEO tells regulators he's committed to Florida

TALLAHASSEE — Unlike their North Carolina counterparts, Florida utility regulators didn't make Duke Energy CEO Jim Rogers squirm in the witness chair, force him to testify under oath or hand over a laundry list of documents.

Instead, the Florida Public Service Commission largely made nice with the man whose company owns the state's second largest utility as he appeared before them Monday for the first time since Duke Energy acquired Progress Energy on July 2.

PSC chairman Ronald Brisé said the meeting with Rogers was designed as more of a meet-and-greet rather than an investigation, though at the heart of the inquiry in North Carolina is a Florida problem: the broken Crystal River nuclear plant.

He noted the staff could follow up later with questions, but Brisé started the meeting by saying, "It is not an evidentiary hearing. Nothing stated in this meeting can be used for an evidentiary meeting."

Added Commissioner Julie Brown: "We're not here to tell you how to run the company, but to find out how you intend to run your company."

The commission invited Rogers to appear at Monday's public meeting after he became the head of the combined company in a national brouhaha over the decision by Duke's board to appoint him in place of former Progress Energy CEO Bill Johnson.

Board members said they replaced Johnson, who for 18 months was slated to lead the new combined company, after a growing lack of confidence. The board said Johnson's leadership style and his management of Progress' nuclear fleet — the Crystal River nuclear plant in particular — led to their decision.

The North Carolina Utility Commission, which has authority over utility mergers that Florida's regulators do not, opened an investigation into Duke's decision to oust Johnson with hearings and demands for emails and other documents to help explain the decision.

The Florida PSC does have authority over the Crystal River nuclear plant. Commissioners said questions about Crystal River will be handled through an ongoing review process.

That process will not include any future questions about the decisions that led to cracks in the 42-inch thick concrete containment building that houses the nuclear reactor because of a settlement agreement between the utility and the state.

Still, the commission's decision to essentially keep Rogers' comments Monday off the record raised some eyebrows.

"I don't agree with that," said J.R. Kelly, the state public counsel, who represents consumers before the PSC.

On Rogers' part, he said he wanted to reassure the commission and the company's newfound 1.6 million Florida customers of Duke's interest in the state.

"We're excited to now have operations in Florida," Rogers said. "Florida is the second largest jurisdiction in which we operate. This was one of the things that made the merger attractive from the very beginning."

What Rogers couldn't do was reassure anyone about the future of the Crystal River nuclear plant.

Duke continues to evaluate the feasibility of repairing the troubled plant, which broke during a botched maintenance and upgrade project in fall 2009.

Commissioners questioned Rogers about the company's plans to repair or permanently close the company's lone nuclear reactor in Florida but got few details.

Rogers said Duke remains committed to "fully and thoroughly review the repair option" for the Crystal River nuclear plant. "While we have not made a decision whether to repair or retire the unit, we are absolutely committed to making the right decision."

An independent study Duke commissioned before the company's merger will be complete in the next couple of months, Rogers said, and then provided to the commission.

The company that insures Crystal River, the Nuclear Electric Insurance Limited, is conducting its own investigation, Rogers said, including taking sworn statements of employees of the utility.

The utility entered nonbinding mediation with NEIL about payment for damages to the nuclear plant. If those negotiations fail, the talks would move to arbitration, Rogers said.

"If NEIL decides not to pay anything, then who pays?" asked Commissioner Art Graham.

Rogers said he has spoken with the head of NEIL and believes the insurer will pay something. But "if NEIL makes what I believe is an unlikely decision to pay nothing, and we make the decision to repair, and are successful, the cost of the repair would be born by the customers," Rogers said.

Rogers and R. Alexander "Alex" Glenn, the incoming Progress Energy Florida president, said the utility continues to study the option to repair Crystal River, and while insurance coverage is important, the most pressing issue is whether they can indeed repair the cracked building.

"The most important fact is can we repair the plant," Glenn said. "What is the risk associated with that? What is the cost associated with that?"

In addition to the meeting with Rogers, Commissioner Eduardo Balbis held a previously scheduled "status update" meeting about the Crystal River plant that he said shows signs of solid cooperation between the utility, consumer advocates and the state.

"The information is flowing as expected," Balbis said. "The customers can be assured that we have a process that is as transparent as possible."

Rep. Michelle Rehwinkel Vasilinda, D-Tallahassee, who does not represent any Duke Energy/Progress Energy customers but along with Sen. Charlie Dean, R-Inverness, was one of just two state lawmakers to attend either hearing, pressed Balbis to keep the Crystal River nuclear plant a focus in the state's look at energy policy.

"I think it's important for the whole state of Florida," Vasilinda said of Crystal River. "That's why I'm here."

Ivan Penn can be reached at ipenn@tampabay.com or(727) 892-2332.

Duke Energy CEO tells regulators he's committed to Florida 08/13/12 [Last modified: Tuesday, August 14, 2012 6:27pm]

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