Duke Energy’s Crystal River deal needs more customer protections, advocates say

Regulators vote on the proposed plan in mid-August.
Duke Energy Florida is asking permission from state regulators to speed up decommissioning its shuttered nuclear power plant at Crystal River. Pictured is the nuclear facility. | [Courtesy of Duke Energy Florida]
Duke Energy Florida is asking permission from state regulators to speed up decommissioning its shuttered nuclear power plant at Crystal River. Pictured is the nuclear facility. | [Courtesy of Duke Energy Florida] [ Duke Energy Florida ]
Published Jul. 9, 2020|Updated Jul. 9, 2020

The future is unclear for Duke Energy Florida’s plan to speed up decommissioning of its shuttered Crystal River nuclear plant a month ahead of state regulators’ vote.

At a three-day hearing this week, customer advocates raised concerns about the chosen contractor, urging the Florida Public Service Commission to require firmer protections for Duke Energy customers.

“They shouldn’t be forced to bear the risk yet again to replenish this (decommissioning) fund if the job doesn’t get done on time and on budget,” said Charles Rehwinkel, lawyer with the Office of Public Counsel.

Related: Duke Energy Florida asks to speed up Crystal River nuclear decommissioning

Last year, Duke Energy asked regulators for permission to dismantle the nuclear plant by 2027 instead of 2074 after striking a deal with Delaware company Accelerated Decommissioning Partners.

Under the deal, Duke Energy would pay the contractor a fixed $540 million, nearly half of the project’s originally projected $1.18 billion, and it would only pay for work that is completed. The money would come from the decommissioning trust that Duke Energy maintains for the plant, collected from customers from 1977 to 2001. It currently has $660 million in it.

“We have the opportunity to lock in a price, eliminate much of (Duke Energy’s) risk and get this plant decommissioned,” said Dianne Triplett, a lawyer representing Duke Energy, at the hearing.

The nuclear portion of the Crystal River facility was shuttered in 2009 when Duke Energy’s predecessor, Progress Energy, botched a do-it-yourself repair, cracking the 42-inch-thick walls of a concrete building that housed the reactor.

Customer advocate groups, such as the Office of Public Counsel and Florida Industrial Power Users Group, said the deal was “potentially workable” but didn’t protect customers enough from future costs should something go wrong.

“We expressed this concern because Duke has not exactly been good at evaluating risk on big nuclear projects in Florida,” Rehwinkel said.

Duke Energy customers paid nearly $800 million toward a Levy County nuclear project that was never built and was later abandoned in 2013 by Duke Energy. The utility struck a deal with regulators three years ago to stop charging customers for the remaining $150 million it had expected to spend on the project.

Related: Duke Energy strikes deal to lower customer bills, boost solar

Rehwinkel and his office asked the commission to require that Duke Energy and Accelerated Decommissioning Partners provide regulators with monthly progress reports instead of annual ones and instate an independent monitor to oversee the process, both of which they said gives regulators an early warning of any issues.

NorthStar Group Services, the contractor’s parent company, said if those conditions were allowed, the deal would need to be renegotiated. The contractor and Duke Energy agreed, depending on which of the conditions, if any, were required.

Part of the Office of Public Counsel’s concerns are about the financial viability of the company and whether it has enough experience doing nuclear power plant decommissioning. NorthStar was acquired in 2017 by a private equity firm in a deal that was meant to give it more financial resources. Duke Energy’s lawyer emphasized during the hearing that its finances are currently stable.

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Scott State, CEO of both Accelerated Decommissioning Partners and its parent company NorthStar, said that the company has dismantled five nuclear plants. A project it is currently working on in Vermont, he said, is similar to the Crystal River project. It is the company’s first time as the lead contractor on a nuclear power plant decommissioning.

“The ADP Group is a one-stop shop for all site decommissioning activities,” State said, “and thus has the capability of performing the majority of decommissioning work itself or through its affiliated partners.”

He noted that his companies have never been cited for safety violations by any regulators.

The Florida Public Service Commission is expected to vote on the deal Aug. 18.