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
bmaz @stephenlemons The Ducey win was pretty much a given. Better question long been whether @FeleciaForAZ and Goddard could win to keep in check
2mreplyretweetfavorite
bmaz RT @csoghoian: The latest @lawfarepodcast in which I discuss the FBI's crypto "front door" & "going dark" with @benjaminwittes. http://t.co
4mreplyretweetfavorite
bmaz RT @ScottGreenfield: Nice to see @ma_franks denounce criminalizing cyberbullying, "long on good intentions and short on precision." http://…
5mreplyretweetfavorite
bmaz @benjaminwittes Stop. You are driving poor @johnson_carrie ....well....batty.
6mreplyretweetfavorite
bmaz @EdgeofSports I would not have. And its prob still bad call, but in retrospect, considering facing Bumgarner yes make defense make the play
10mreplyretweetfavorite
bmaz RT @KagroX: Kickstarter to buy Kaci Hickox a white Ford Bronco.
37mreplyretweetfavorite
bmaz @JulieATate Julie, clearly the Fox announcers last night did not slurp Bumgarner enough, and you NEED more of it. Think of the children!
39mreplyretweetfavorite
bmaz @walterwkatz If only there were a solution, like.....open and transparent accountability!
41mreplyretweetfavorite
bmaz @walterwkatz Think the reverse also true too; people who believe there is gross deficiency in police accountability have negative views.
41mreplyretweetfavorite
emptywheel @JulieATate Look on the bright side. Starting this weekend you've got a QB controversy to look forward to.
43mreplyretweetfavorite
bmaz @Espngreeny Again, Gibson in 1967.
50mreplyretweetfavorite
emptywheel @speechboy71 Btu as I said, those three questions should be fairly basic for anyone making claims you made in your review. @henryfarrell
50mreplyretweetfavorite
October 2014
S M T W T F S
« Sep    
 1234
567891011
12131415161718
19202122232425
262728293031