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Progress Energy execs sell Wall Street on fixing broken Crystal River nuclear plant

I'm listening in on Tuesday's conference call as Progress Energy's top executives — from CEO Bill Johnson and top nuclear energy exec Jeff Lyash to Progress Energy Florida chief Vinny Dolan and CFO Mark Mulhern — try to convince Wall Street analysts that spending $1.3 billion or so to fix the aging and broken Crystal River nuclear power plant is the right way to go.

There's lots of talk about it being "prudent" to revive rather than retire a nuke plant shut down for repairs (that never quite did the trick) since the fall of 2009. At best, the Progress Energy execs say, the nuke plant won't be operating again until some time in 2014. That's close to five years without a spark generated by a nuclear plant that's been a core supplier of electricity to Floridians since the late 1970s.

The plant's original operating license ends in 2016. But Johnson all but assures analysts that federal regulators will approve a request for a 20-year extension of the plant's life until 2036.

In fact, that extension sounds almost like a done deal — as long as some cracks separating the concrete in the steel-reinforced, 42-inch thick containment building at the Crystal River nuke plant can be repaired and meet original strength and safety specifications.

This is hardly a topic these well-paid business managers want to spend their time on. Combined, the workday cost of these four execs tops $5,240 an hour, making for one expensive conference call. Surely they'd rather be expanding Progress Energy's business empire with new nuclear power plants than defending a complex and expensive patch job on a Citrus County plant inherited when Progress Energy bought St. Petersburg's Florida Power Corp. in 2000.

Makes you wonder what Duke Energy, which is buying Progress Energy, really thinks of this stumble in Florida.

As CEO, Johnson supplies the Big Picture to analysts, cautioning that Progress Energy will continually "reassess" its plan to fix the Crystal River plan as fresh engineering details and costs emerge.

Lyash, whom Floridians may recall ran Progress Energy Florida several years ago, adds his nuclear expertise. He tells how the company considered 22 fix-it options, from making "minor repairs" to replacing the plant's entire containment building. The company chose a middle path, Lyash suggests, with a repair plan that will use standard construction materials and practices most likely to win approval from the Nuclear Regulatory Commission in a time frame that will not prove prohibitively expensive.

The alternative, explains Dolan, was to shut down the Crystal River plant for good and eventually replace it with a new power plant run by natural gas.

Not likely. Would you abandon a nuclear plant worth billions that you wanted to run another 25 years?

Finally, it's Mulhern's job to explain the tricky negotiation Progress Energy must undertake with NEIL, the specialty firm that insures against nuclear power plant mishaps. At times, the exec sounds like some poor Floridian trying to make sense of the gibberish in his homeowner's insurance policy while filing a post-hurricane claim.

And what about safety? It's Job No. 1, these execs say. But keeping shareholders happy is in a very close second place.

Contact Robert Trigaux at trigaux@sptimes.com.

Progress Energy execs sell Wall Street on fixing broken Crystal River nuclear plant 06/28/11 [Last modified: Tuesday, June 28, 2011 10:28pm]
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