Many unanswered questions in Crystal River nuclear plant settlement

Published July 25, 2012

It's impossible to know exactly how much a recent settlement over the damaged Crystal River nuclear plant will affect Progress Energy Florida customers' rates.

Too many questions remain unanswered:

Will Progress repair the broken plant or shut it down? Will insurance pick up the repair bill or will customers and investors have to pay? Will the utility's proposed Levy County plant ever be built or will the company pursue another power source?

The settlement agreement announced last week came out of a case before the state Public Service Commission over Progress Energy's botched handling of a steam generator replacement project at the nuclear plant in Citrus County. The result was three cracks in the reactor's concrete containment building, which has kept the plant offline since fall 2009.

One thing is certain. In five years, after the settlement's initial agreements end, Progress' 1.6 million Florida customers can expect their bills to jump.

"They're kicking the can down the road," Arnie Gundersen, a nuclear engineer and consultant before state public utility commissions, said of the agreement. "There's no doubt about it."

When will customer rates increase?

Beginning Jan. 1, 2013, bills are expected to increase by about $4.93 from $123.19 per 1,000 kilowatts of usage to about $128.12. That is a smaller increase than was projected before the settlement, which required Progress to refund $288 million.

Are customers obligated to pay any more costs related to the plant's repairs?

Yes. About $380 million in costs related to buying electricity from other sources after the plant went down.

Could customers get another refund?

Yes. An additional $100 million if Progress decides to repair the Crystal River nuclear plant but does not start work before the end of 2012.

What other benefits did customers get related to the Crystal River plant?

Progress generally will not be allowed any rate increase until 2017, unless there is a significant increase in costs for things like fuel, energy conservation or environmental protection.

Any cost overruns beyond repair expenses paid for by the insurance company will be split between customers and Progress' investors up to the first $400 million. Additional amounts would require Public Service Commission approval.

Progress also agreed to freeze advance payments for the proposed $20 billion Levy County nuclear plant at $3.45 a month for five years from 2013 to the end of 2017. Progress had projected that the fee for the Levy plant — scheduled to open in two phases beginning in 2021 — would go as high as $26.05 in 2017, unless the utility found investors to become co-owners.

What happens when the rate freezes expire?

Progress could recoup costs related to the Crystal River plant, if it gets repaired. Customers could also start paying much larger payments toward building the Levy County nuclear plant, if it is still in the works. Or they could be on the hook for costs related to building other power sources, like natural gas plants.

Has Progress definitely decided to repair the Crystal River nuclear plant?

No. Progress continues to analyze cost, engineering options and insurance coverage. Answers are not expected for at least a couple of months, Progress president and chief executive officer Bill Johnson said in a conference call with analysts Monday.

How much are the repairs projected to cost and has insurance said whether the damage is covered?

Progress initially told investors last year that repair costs and alternative electricity since the plant's initial construction accident range from $2.5 billion to $2.9 billion. The utility has said it believes insurance will cover at least three quarters of the total.

The insurer, the Nuclear Electric Insurance Limited, has paid $298 million but stopped making payments last year. NEIL is reviewing the claim to determine whether it is covered. "This is a big, complex, complicated claim that NEIL has not seen the likes of before," Johnson said Monday.

If NEIL doesn't pay, are customers on the hook?

Yes, one way or another, customers would have to cover some of the costs, whether by helping to pay for repairs or to build another power source.

Ivan Penn can be reached at or (727) 892-2332. Follow him on Twitter at