NEIL

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

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bmaz My daughter's date for night does not seem to appropriately love Kiki The Wonderdog. How is this gonna work out? http://t.co/wcXX1ECjLy
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emptywheel RT @shephardm: #Somalia's new police chief once wanted for "war crimes" in Canada. Our @TorontoStar report: http://t.co/q5eVsJN8No http://t…
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emptywheel @dangillmor Don't get me wrong--I'm not betting against that.
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emptywheel @dangillmor Several GOPers have called it torture too.
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emptywheel @BiellaColeman Which? Zoinks or doinks? We're halfway to a comic tho. @adamgoldmanwp @matthewacole
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emptywheel Now that everyone has gotten on my anti-Brennan bus, can we revisit what role he had in setting up the NYPD CIA-on-the-Hudson please?
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emptywheel @ThePlumLineGS Shhh. Don't tell them yet.
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emptywheel @lrozen He refused to keep torturing even in spite of DTA? Dunno, but I'm pretty sure it wasn't lying.
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emptywheel @adamgoldmanwp The thought of using even a marginally more sensual word in the context of Petraeus gives me hives.
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emptywheel People! CIA Directors don't get fired for lying. They get fired for doinking their biographer.
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emptywheel @sarahjeong I'm with folksy torture, that's a keeper.
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emptywheel RT @trevortimm: If you have the CIA torture report & are in a transparent mood, here's a list of the news orgs running @SecureDrop: https:/…
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