Jim Rogers

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 @zefirotorna If there are bigger pieces of human scum at this time on earth than McCulloch and @GovJayNixon it's hard to fathom who they are
4hreplyretweetfavorite
bmaz RT @zefirotorna: @bmaz Agree on @GovJayNixon. And he said no a special prosecutor about 6 hours ago. He and McCulloch are on this together.
4hreplyretweetfavorite
bmaz @KellyCDenver @larosalind this is actually Honergirl. Look them up on google. Just killer.
6hreplyretweetfavorite
bmaz Well @laRosalind I'm here with my Gin Blossom friends http://t.co/Eqc74Mk0DG
7hreplyretweetfavorite
emptywheel @FalguniSheth It's actually a family thing. My grandmother (or great grandmother) gets credit. @bmaz
8hreplyretweetfavorite
bmaz @ScottGreenfield That is Dara Lind, @DLind She is very cool and does excellent work. She is not your average Voxer.
8hreplyretweetfavorite
bmaz RT @emptywheel: Ya'll know the best way to make yummy turkey is to slather it all with bacon, right? http://t.co/nqlLQ4ABlh
8hreplyretweetfavorite
bmaz @nickmartin Cool. Let me know and we will get lunch again or something. Happy holidays!
8hreplyretweetfavorite
bmaz @nickmartin You back for Christmas this year?
8hreplyretweetfavorite
bmaz Would have been better if Obama had spared the life of Abdulrahman Awlaki instead of turkeys Mac and Cheese, but bygones I guess.
8hreplyretweetfavorite
bmaz @ggreenwald @benwizner I really wanted to be ED BALLS, but will settle for First Sea Lord.
8hreplyretweetfavorite
November 2014
S M T W T F S
« Oct    
 1
2345678
9101112131415
16171819202122
23242526272829
30