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 @davidw76 I dunno. Clinton is nothing if not predictable. And I will take her in a microsecond over Trump or any other GOP b/c of SCOTUS.
3hreplyretweetfavorite
emptywheel CNN, on its non-representative sample, doesn't mention they're all white.
3hreplyretweetfavorite
emptywheel John Podesta giving a long interview w/ CNN that his campaign ought to be able to rip to smithereens.
3hreplyretweetfavorite
bmaz Who is Clinton? Goldwater Girl? McCarthyite? 90's liberal neocon? Obama acolyte? Newfound "progressive" she now espouses? #NeoLibWarmonger
3hreplyretweetfavorite
bmaz @RWwatchMA Huh. Not on my map!
3hreplyretweetfavorite
emptywheel One of Hillary's strongest moments in debate is questioning whether Walker would donate $$ for college.
3hreplyretweetfavorite
bmaz Seriously, when election is headed into far more integrated states like SC and NV, why the hell did @DWStweets + @TheDemocrats debate in WI?
3hreplyretweetfavorite
emptywheel RT @qrendel: ICYMI: @emptywheel livetweets of political debates are probably better than the debates themselves. Recommend.
3hreplyretweetfavorite
emptywheel RT @Will_Bunch: @emptywheel Blurb! Not a forward
3hreplyretweetfavorite
emptywheel What I learned from tonight's Dem debate: Sanders wrote a forward for a book.
3hreplyretweetfavorite
February 2016
S M T W T F S
« Jan    
 123456
78910111213
14151617181920
21222324252627
2829