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State regulators could vote today on settlement with Duke Energy

State regulators expect to vote today on a sweeping plan that would resolve who pays the costs of the botched upgrade at the Crystal River nuclear plant, above, and the failed Levy County nuclear project. Under the proposed settlement, Duke’s customers would bear the largest burden, about $3.2 billion, with insurance picking up $835 million and the rest by the utility’s shareholders.

MAURICE RIVENBARK | Times

State regulators expect to vote today on a sweeping plan that would resolve who pays the costs of the botched upgrade at the Crystal River nuclear plant, above, and the failed Levy County nuclear project. Under the proposed settlement, Duke’s customers would bear the largest burden, about $3.2 billion, with insurance picking up $835 million and the rest by the utility’s shareholders.

TALLAHASSEE — State regulators expect to vote today on a settlement agreement over Duke Energy's $5 billion nuclear boondoggle after hours of testimony and questions about whether the deal is good for the utility's customers.

The settlement between Duke Energy and the state Office of Public Counsel, which represents consumers before the Public Service Commission, is a sweeping plan that would resolve who pays the costs of the botched upgrade at the Crystal River nuclear plant and the failed Levy County nuclear project.

Under the proposal, Duke's customers would bear the largest burden, about $3.2 billion, with insurance picking up $835 million and the rest by the utility's shareholders.

"Obviously, this is a monumental case before us," said Commissioner Julie Brown.

Virtually every party that represents customers before the commission defended the plan.

The most critical issue, said Charles Rehwinkel, deputy public counsel: "Everything was resolved as one package. The dollars that come directly from the Duke shareholders that reduce the cost that customers will bear are paramount. In my heart of hearts, I'm convinced that this deal overall is good for the customers."

Added Robert Scheffel "Schef" Wright, a lawyer who represents the Florida Retail Federation: "This is a tragedy. There's no other way to describe it. We believe this is the best deal we could negotiate."

But opponents told the commission that consumer advocates moved too hastily to settle.

"I'm not going to join the chorus of Kumbaya this morning," said Rep. Dwight Dudley, D-St. Petersburg. "It was plain negligence. I don't know why ratepayers are getting stuck in a major way."

Even before Tuesday's hearing began, opponents voiced their opposition.

With signs urging state regulators to "Stop Duke Rip-off," a small group of protesters threatened a class-action lawsuit if the settlement goes forward.

"We are tired of Duke taking advantage of us," said Dalyn Houser of Stop Duke Rip-off Pinellas County, a group of about 100.

The groups asked the commission to reject or at least delay the settlement agreement to hold public hearings in the communities that Duke serves.

Lawyers in the case said such hearings would be illegal because state law only allows expert testimony in this type of case.

Commissioner Art Graham asked Duke officials if they would be willing to participate in town hall meetings as an alternative so consumers could voice their concerns.

"Certainly," said R. Alexander "Alex" Glenn, Duke Energy's Florida president. "We're open to talking to customers any time."

For its part, Duke Energy Florida said the settlement agreement is in the "best interest of DEF and its customers," said John Burnett, a lawyer with the utility. He called the deal "fair, just and reasonable."

Duke's spending includes as much as $1.5 billion on the Levy project for land purchases, planning, development, nuclear components and financing charges.

For Crystal River, Duke spent hundreds of millions of dollars replacing the plant's old steam generators and on efforts to bolster its generation capacity.

The spending escalated after workers botched the upgrade during the steam generator phase of the project. The utility cut into the 42-inch thick concrete reactor containment building and it cracked. Attempts to repair the plant and bring it back online led to more cracks.

Duke announced Crystal River's closure. It is Florida's first nuclear plant to close and undergo decommissioning and the first major one in the Southeast.

The upgrades, repairs and replacement power Duke has purchased in place of Crystal River's output have resulted in more than $3 billion in expenses, even though the plant will never produce power again.

Some of those expenses have been covered by insurance that reduced the bill to customers by $762 million. Duke also agreed to reduce purchase power obligations by $388 million and to write off another $295 million in debt on the Crystal River plant.

Even so, Duke projects the average residential customer's rate to increase by $8.24 on Jan. 1 to $124.30 per 1,000 kilowatt hours of usage if the settlement agreement passes.

Duke said Wednesday that it will likely need two new natural gas plants plus some other generating source that it would build or buy in 2016 or 2017 to replace the loss of the Crystal River nuclear plant and the proposed Levy County nuclear project.

"This is one of the most colossal mistakes, I think, in the history of the United States," Dudley said, "and maybe even beyond."

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

State regulators could vote today on settlement with Duke Energy 10/16/13 [Last modified: Wednesday, October 16, 2013 10:47pm]
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