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Progress Energy insists approach to bungled nuclear project was 'reasonable'

Progress Energy asked the state Monday to rule the botched handling of improvements at its Crystal River nuclear plant were "reasonable" and "prudent," the first step to passing at least some costs to customers.

Customers could pay as much as $690 million or about a quarter of the $2.5 billion in repair costs and purchase of alternative energy while the plant remains offline. The plant has been offline for two years and isn't expected to return to service for at least two more.

Projections on the repair costs would make it one of the costliest nuclear incidents in U.S. history.

On Sunday, the Times documented how Progress Energy opted to manage the improvements at the nuclear plant on its own. In its decision to handle the project itself, Progress Energy became the first utility in the country to oversee cutting into its own concrete nuclear containment building and replacing the reactor's steam generators.

Progress Energy eschewed the expertise of the two companies that handled all of the other similar projects in an effort to shave about $15 million off of the lowest bid of $81 million.

During Progress Energy's management of the work, the nuclear plant's 42-inch-thick concrete containment building cracked — the first time a so-called "delamination" problem has occurred in 34 successful steam generator replacements nationwide.

In its filing with the Public Service Commission on Monday, Progress Energy stated it "appropriately" handled the project after spending "five years and tens of thousands of man hours carefully planning" the replacement of the nuclear plant's steam generators.

"Nothing the Company could have done, based on what management knew or should have known at the time, would have prevented the delamination and subsequent extended outage," the utility stated in the petition that includes hundreds of pages of testimony and exhibits.

The PSC will determine whether Progress Energy's actions were prudent and reasonable, and how much customers can be assessed.

J.R. Kelly, the state public counsel who represents consumers before the PSC, said his office is reviewing the filing to determine whether the utility's handling of the project was reasonable.

"If it turns out that Progress was not prudent or in fact was negligent in doing the repairs, certainly our position is going to be that ratepayers shouldn't have to pay for that," Kelly said.

The public counsel's office will have until Feb. 10 to submit its testimony in response to Progress Energy's petition.

The PSC is scheduled to hear the case June 11-15.

It is an unprecedented case with a repair problem that Progress Energy has acknowledged never occurred elsewhere.

"Simply put, this event took the entire industry by surprise, and has fundamentally changed the way the industry analyzes post-tensioned, pre-stressed concrete structures," Progress Energy stated in its petition.

In its "root cause analysis," Progress told the Nuclear Regulatory Commission that the crack resulted from the loosening of steel tendons that keep pressure on and help hold the concrete building together.

Progress Energy thought it had fixed the problem when it repaired the plant after the initial crack in 2009. The utility was set to bring the plant back online in March, but the containment building cracked again as workers tightened the tendons.

Part of the cost Progress itemized in its petition is the amount it spent buying replacement power and fuel while the plant was offline from October 2009 through the end of this August.

Of the $439 million Progress Energy spent during that period, the utility's insurance is covering all but about $130 million. Customers already are paying for part of that cost.

Progress customers pay $3.57 per 1,000 kilowatt hours of usage on the fuel portion of their electricity bill each month to cover that cost.

The utility has projected there will be an additional $1 billion in replacement power and fuel costs until the plant comes back online, with customers paying about $560 million of that cost.

Sen. Mike Fasano, R-New Port Richey, said he is concerned that the costs to fix a problem that resulted from Progress Energy's management decision will overburden customers.

"It is my opinion ... those customers should not pay for those additional costs," Fasano said.

He said fees for building a planned nuclear plant in Levy County and now the costs for repairs will significantly increase electric bills.

"Already, just a little over 60 percent of your electric bill, my electric bill, 60 percent of that is pass-throughs, whether they be for building of nuclear plants or whatever they may be," he added. "This will only increase that percentage."

Ivan Penn can be reached at ipenn@sptimes.com or (727) 892-2332. Follow him on Twitter at twitter.com/Consumers_Edge and find the Consumer's Edge on Facebook.

Progress Energy insists approach to bungled nuclear project was 'reasonable' 10/10/11 [Last modified: Tuesday, October 11, 2011 8:40am]
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