Bill Johnson

Crystal River Crack: The Moral Hazard of Private Utility Companies

About fourteen months ago, I wrote about the Florida Containment Dome Crackers who had the bright idea that they could save $15 million while refurbishing the steam generators at the Crystal River nuclear power plant in 2009. They wound up cracking the containment dome because they had no clue on managing this complex project: it was the managing engineering contract they decided to bypass to save money. Yesterday, Duke Energy, the successor to Progress Energy (more on that change in a bit), finally announced that they will no longer pursue the repairs and that the plant will be closed. The math has only gotten worse since my earlier report. Now the overall cost estimate for the repairs, replacement energy while the plant is down and construction of a new gas power plant is up to $3 billion from the earlier $2.5 billion estimate. Of those costs, insurance will pay $835 million and Duke’s customers will pay the rest. Most depressing of all is that the Tampa Bay Times’ Ivan Penn, who has been the go-to source on this story since its start, reports that Duke will pocket $100 million of the $1.3 billion expended to date on the “upgrade” to the plant. Clearly, the regulatory environment in Florida enables private companies posing as public utilities to feed their addiction to public funds without consequence for bad decisions. In fact, Duke has now been rewarded with $100 million when their predecessor only sought to pocket $15 million. Rate-payers will be stuck with a bill for over $2 billion, some of which it appears to me Duke will be allowed to pocket while building the replacement plant.

Meanwhile, Citrus County, where the plant is located, is looking at 600 lost jobs and a huge blow to its tax base (the replacement gas plant will be on the Atlantic coast instead of the Gulf coast where Citrus County is located):

Shutting the plant would drop Duke Energy’s tax bill, which was $35 million, to at most $13 million, an executive of Duke subsidiary Progress Energy Florida told the county last month.

That shortfall, equal to a fourth of the county’s general fund, could have dire consequences for schools, safety and public services in this expanse of forests and strip malls less than 80 miles north of Tampa.

The locals see tough times ahead:

In the midst of the Crystal River fiasco, Progress Energy entered into a merger agreement with Duke Energy. Despite Duke being the larger entity, the original merger agreement called for Progress CEO Bill Johnson to be head of the new combined company. The deal closed in July of last year, but Johnson’s tenure as CEO lasted only a few hours. From behind the Wall Street Journal paywall: Continue reading

Emptywheel Twitterverse
bmaz RT @johnson_carrie: Amy Jeffress, former DC prosecutor and national security official at @thejusticedept, joins Arnold & Porter law firm in…
7mreplyretweetfavorite
emptywheel "Center prepared to show in great detail how little ABC’s Brian Ross & Matt Mosk understood abt even most fundamental concepts & key facts"
2hreplyretweetfavorite
emptywheel @gregorydjohnsen Or is making shit up again to be inflammatory.
3hreplyretweetfavorite
emptywheel @gregorydjohnsen And your expert opinion on that claim?
3hreplyretweetfavorite
emptywheel RT @JoeSudbay: Not sure how @comcast can handle a big merger when it can't handle service in middle of DC.
3hreplyretweetfavorite
emptywheel RT @faisalislam: Ex Anglo Irish Chairman Sean Fitzpatrick: not guilty on all counts, walks free from #anglotrial http://t.co/o32BKHqTIW
3hreplyretweetfavorite
emptywheel @sbagen I keep waiting for someone to sue Senate Press Gallery as their standards are very arbitrary. @SCOTUSblog would make perfect case.
3hreplyretweetfavorite
emptywheel It's ironic that CIA boasting abt disseminating censored docs as 9/11 trial grinds to a halt over censored shitty doc http://t.co/ilNVAkp3w6
4hreplyretweetfavorite
emptywheel Dangerous Censored Documents, in Soviet Russia and War on Terror America http://t.co/ilNVAkp3w6
4hreplyretweetfavorite
emptywheel @khanserai Dunno. I think self-interested and often deceptive leaking is reflexive for FBI. It's like breathing to them. @onekade
4hreplyretweetfavorite
emptywheel @khanserai Precisely. They can say whatever they want to NBC, and NBC won't question why that's possible. W/DOJ it'd be risky. @onekade
5hreplyretweetfavorite
emptywheel RT @onekade: FBI refused to cooperate with the House Homeland Security Committee investigation and stonewalled the DOJ IG, but spoke to Dat…
5hreplyretweetfavorite
April 2014
S M T W T F S
« Mar    
 12345
6789101112
13141516171819
20212223242526
27282930