Nuclear Electric Insurance Limite

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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emptywheel @Ali_Gharib I don't think he walked anything back--just got more exact. Think what he said got blown out of context. @OKnox @bmaz @SangerNYT
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emptywheel It is true interest groups are how policies get passed. But that also means they don't represent will of voters. https://t.co/qouUlWmvJf
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emptywheel Biased Pluralism and the Defense of “Reality” in the Democratic Primary https://t.co/qouUlWmvJf
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emptywheel @CommsDirector It's more fun to have fund it.
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emptywheel RT @JasonLeopold: Afghan courts said these ex-U.S. detainees should be freed. Why weren’t they? https://t.co/sFXkLoxLun
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bmaz RT @davidminpdx: 11. The NYT declared the Crime Bill "dead." https://t.co/yfECTUDtzp
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bmaz RT @davidminpdx: 10. Stunningly, despite all of the momentum, in Aug 1994, a coalition of left and right stopped the bill. https://t.co/Vpt
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bmaz RT @davidminpdx: 9. Instead he held pep rallies for law enforcement – urging them to lobby for the bill. https://t.co/EbIfLMorFg
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bmaz RT @davidminpdx: 8. But Clinton showed no leadership, did ZERO to rein in "tough on crime" aspects of the bill. https://t.co/WsAxv0il8P
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emptywheel Dow Chemical had a cancer cluster problem so American Chem Council didn't to count cancer victims in its study. https://t.co/QyQMIZL3Jz
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bmaz RT @davidminpdx: 7. The NYT – voice of the liberal establishment – repeatedly called on Clinton to show leadership, rein in excesses. https…
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bmaz And we had to fight it like dogs at state level too because of craven headwind Clinton's fed policies gave "tough" https://t.co/Dv3WrpOUbW
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February 2016
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