Progress Energy

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
JimWhiteGNV Hmm. William Broad asks why silicon content of anthrax attacks not investigated better. http://t.co/kVd8i55k0V See https://t.co/29vuNgukNV
7mreplyretweetfavorite
emptywheel @GregoryMcNeal My bacon comes from a farm too small for a drone to find. #ObscurityInBacon
10mreplyretweetfavorite
JimWhiteGNV RT @emptywheel: When certain Tweeps or certain Gray Science Journos write about a topic it tends to raise suspicion, not allay it.
10mreplyretweetfavorite
emptywheel @GregoryMcNeal Give it 6 months and SJC Chair and CAFO fan will ban that.
14mreplyretweetfavorite
emptywheel @ErrataRob That was a long time ago, though, and a different President, so we don't have to worry about a rush to judgment.
15mreplyretweetfavorite
emptywheel Sometimes it makes me grumpy that (there seems to be) less women's hoop on TV than in recent years. But HUGE disparity in teams.
16mreplyretweetfavorite
emptywheel @ErrataRob AKA, when you've got a military govt's itching to use, Al Qaeda SURELY could not have done 9/11 by itself, it needed Iraq.
17mreplyretweetfavorite
emptywheel Let me be more aggressive than GAO. FBI did not find the anthrax killer. Terrorist still at bay. \\_O_//
19mreplyretweetfavorite
emptywheel When certain Tweeps or certain Gray Science Journos write about a topic it tends to raise suspicion, not allay it.
21mreplyretweetfavorite
JimWhiteGNV RT @emptywheel: GAO just told us maybe FBI didn't really find anthrax killer. Maybe we should approach these Qs skeptically, eh? http://t.c…
22mreplyretweetfavorite
emptywheel GAO just told us maybe FBI didn't really find anthrax killer. Maybe we should approach these Qs skeptically, eh? http://t.co/PfhrWq7jBh
22mreplyretweetfavorite
emptywheel RT @20committee: And ... heeeere come the #SonyHack truthers. No way it was North Korea, it was totally Luxembourg or Canada or something.
27mreplyretweetfavorite
December 2014
S M T W T F S
« Nov    
 123456
78910111213
14151617181920
21222324252627
28293031