UPDATE 1-Duke Energy says Crystal River nuclear repair could exceed $3 bln

Mon Oct 1, 2012 4:09pm EDT

HOUSTON, Oct 1 (Reuters) - Returning the damaged Crystal
River nuclear unit in Florida to service could cost $3 billion
and take eight years, according to an independent review of
repair options commissioned by Duke Energy as it pursued
a merger with Progress Energy earlier this year, the utility
said in a filing Monday. 
    The three-year shutdown of the 838-megawatt Crystal River
reactor became an issue in the weeks before the merger was
completed in July and played a role in the surprise ouster of
Bill Johnson, the Progress executive who had been slated to lead
the merged companies, executives and board members have said.
    Progress Energy Florida supplied the Crystal River report
prepared by Zapata to Florida regulators Monday, said incoming
utility president Alex Glenn, adding that no decision has been
made whether to fix Crystal River or to retire the unit. 
    Progress said the review found that a repair plan developed 
by Progress "appears to be technically feasible, but significant
risks and technical issues" remain unresolved. 
    Zapata estimated that repair cost at $1.49 billion, above
Progress Energy's estimate of $900 million to $1.3 billion. 
    Zapata also prepared an estimate for more extensive work
based on other scenarios. A worst-case scenario that included
eventual replacement of the plant's dome and containment
building walls came in at $3.43 billion, with an eight-year time
frame. 
    The reactor has been shut since 2009 due to serious cracks
found in the containment building walls. Progress had said the
unit might return to service in 2014 if repaired.
   
    "We will proceed with a repair option only if there is a
high degree of confidence that the repair can be successfully
completed and licensed within the final estimated costs and
schedule, and is in the best interests of our customers, joint
owners and investors," Glenn said in a statement.  
   Charlotte, North Carolina-based Duke Energy became the
largest electric utility and second-largest nuclear operator in
the nation last month when it acquired Raleigh, North
Carolina-based Progress Energy in an $18 billion merger.
 
    Duke Chairman James Rogers has said the decision to repair
or retire Crystal River may not be made before the end of 2012
as the utility had agreed to do in a settlement with Florida
utility regulators earlier this year. 
    Under that pact, the utility would be able to pass along to
customers the cost to replace Crystal River's output through
2016 if repair work began before the end of 2012. If repairs
begin later, the utility agreed to refund replacement power
costs up to $40 million in 2015 and $60 million in 2016.  
    If the Crystal River reactor is retired, also an expensive
option, the utility will be able to recover its remaining
investment in the plant from its 1.6 million customers,
according to the settlement. Any insurance proceeds would be
applied to replacement power costs first.
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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