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

Emptywheel Twitterverse
emptywheel RT @Taniel: the full video is here: #LaquanMcDonald falls immediately & no longer moves. And yet he was shot 16 tim…
emptywheel @kgosztola So who did get into presser? Any chance city is giving preferential access to those who've agreed to edit it?
emptywheel RT @muckrakery: Waiting outside as the rest of Chicago establishment media get first access to the video I helped pry loose.
emptywheel RT @kgosztola: Important question: Why didn't any establishment media outlet in Chicago sue city for video of #JasonVanDyke killing #Laquan
emptywheel RT @WSJ: A judge has chided the Obama administration over delays in closing the Guantanamo prison
emptywheel To be clear, I don't think Obama changed OWN rationale for assassination being cool--I think John Yoo's (or whoever's) was just that bad.
emptywheel @LemonSlayerUS Hard to believe it's not. 17 secs isn't lot of time to chase down Russian plane if you're not planning ahead @empiricalerror
emptywheel @LemonSlayerUS THe radar shows a pass through, a circle around, then another pass through. So maybe that circle around was a bombing run?
emptywheel @LemonSlayerUS Was Russia warned not to breach airspace or not to attack Turkmen rebels?
emptywheel Obama Administration Changed the Rationale for Why Assassinations Don’t Violate the Assassination Prohibition
emptywheel Across country, grown men are shriveling at sight of pardoned turkey, hiding behind (lethal) outdoor turkey fryers
emptywheel Some crazy hippies point out buzzards already fly all over America eating your pets and seed corn, met with silence.
November 2015
« Oct