February 5, 2013 / 2:05 PM / 7 years ago

UPDATE 2-Duke to retire Florida Crystal River nuclear plant

* Power companies to retire two U.S. reactors in 2013
    * Crystal River coal plants to remain in service
    * Duke may build new gas plant in Florida

    By Scott DiSavino
    Feb 5 (Reuters) - Duke Energy Corp, the biggest
power company in the United States, said Tuesday its Progress
Energy Florida utility will retire the Crystal River nuclear
plant in Florida.
    The plant has already been safely shut down and offline
since late 2009 due to damage done to the reactor's containment
structure during a power upgrade and the replacement of the
unit's steam generators.
    There are currently 104 reactors licensed to operate in the
United States. The reactors have a total capacity of about
101,000 megawatts (MW) and generate about 20 percent of the
nation's power.
    In addition to Crystal River Unit 3, Dominion Resource Inc
 plans to retire the Kewaunee reactor in Wisconsin over the
next few months due primarily to weak natural gas prices from
record shale production that has reduced power prices to decades
low levels, making the continued operation of Kewaunee
    See Factbox on retired nuclear reactors 
    Duke said in a release it is reviewing alternatives to
replace the power produced by Crystal River, including the
potential construction of a new natural gas-fired plant.
    Duke said the four coal plants at Crystal River with a
capacity of 2,291-MW will remain in service. The reactor had a
capacity of 860 MW.
    "We believe the decision to retire the nuclear plant is in
the best overall interests of our customers, investors, the
state of Florida and our company," Jim Rogers, CEO of Duke
Energy said in a release.
    "This has been an arduous process of modeling, engineering,
analysis and evaluation over many months. The decision was very
difficult, but it is the right choice," Rogers said.
    Crystal River 3 began operating in 1977 and was shut in the
autumn of 2009 for refueling and replacement of its steam
generators when a delamination, or crack, occurred in the outer
layer of the containment building's concrete wall.
    The process of repairing the damage and restoring the unit
to service resulted in additional delaminations in other
sections of the containment structure in 2011, the company said.
    During the ensuing months, Progress Energy, which owned the
reactor, and Duke Energy merged in July 2012, evaluated the
ability to successfully repair the unit, the risks associated
with any repair and the repair scope as well as the likely costs
and schedule, Duke said.
    In late 2012, a report confirmed that repairing the plant
was a viable option but that the nature and potential scope of
repairs brought increased risks that could raise the cost
dramatically and extend the schedule. That report found the
repair bill could exceed $3 billion and take eight years.
    In addition, the company and its insurance carrier, Nuclear
Electric Insurance Limited (NEIL), have reached a resolution of
the company's coverage claims through a mediation process. Under
the terms of the mediator's proposal, NEIL will pay an
additional $530 million.
    Along with the $305 million NEIL has already paid, customers
will receive $835 million in insurance proceeds. This will be
the largest claim payout in the history of NEIL, Duke said.
    "We believe accepting the mediator's proposal is in the
overall best interests of our customers and shareholders, and
the monies we receive will go directly to customers to reduce
their electric bills," Rogers said.
    For the future, Duke expects to put the reactor into "a safe
storage configuration, requiring limited staffing to monitor
plant conditions, until the eventual dismantling and
decontamination activities occur, usually in 40 to 60 years."
    To meet customer needs, Duke said Progress Energy Florida
will continue to serve customers reliably as it has through the
extended outage, in the coming years through a combination of
power generation, energy efficiency and purchasing electricity
in the market.
    The company said it was evaluating the potential to build a
new gas plant that could come online as early as 2018, noting
there was no definite plan for new generating capacity at this
    The company did not mention in its release Tuesday the
proposed construction of a new nuclear plant in Levy County,
Florida, near the Crystal River plant.
    In 2012 before the merger with Duke, Progress said it
delayed the proposed in service date for the Levy county nuclear
power plant to 2024 with a second unit following 18 months
later. The company also boosted the cost estimate for the
2,200-MW project to between $19 billion and $24 billion.
    About 600 full-time employees work at the reactor. Many will
remain onsite to work through the closing and decommissioning of
the unit, Duke said, noting it will work with employees to help
as many as possible make the transition to positions in other
Duke organizations.
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