Crystal River Nuclear Plant to be retired; company evaluating sites for potential new gas-fueled generation

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Feb 05, 2013, 08:00 ET

CRYSTAL RIVER, Fla., Feb. 5, 2013 /PRNewswire/ -- Following a comprehensive analysis, Progress Energy Florida, a subsidiary of Duke Energy, announced today that it will retire the Crystal River Nuclear Plant (CR3) in Citrus County, Fla. The plant has been safely shut down and offline since late 2009.

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The company is reviewing alternatives to replace the power produced by the unit, including the potential construction of a new, state-of-the-art natural gas-fueled plant. The company is evaluating a number of potential sites for new plant capacity that may be needed in the future to meet Florida customer needs, including sites in Citrus County.

The energy complex's four coal plants remain in service in Citrus County.

"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," said Jim Rogers, chairman, president and CEO of Duke Energy. "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."

"The Crystal River Nuclear Plant has been an important part of our generation fleet for three decades," said Alex Glenn, state president, Progress Energy Florida. "We are very sensitive to the impact on our employees at the plant and on the Citrus County economy.

"We are working to place as many employees affected by today's announcement in other positions within the company, and we are committed to working with Citrus County to lessen the effects as much as possible," he said.

The company's decision comes after a comprehensive, months-long engineering analysis of the damaged CR3 containment structure. The nuclear unit, which began operating in 1977, had been shut down in the fall 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.

During the ensuing months, Progress Energy – and, more recently, Duke Energy – 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.

A report completed in late 2012 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.

NEIL coverage claims resolution

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.

"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.

Timing and next steps

The company is working to develop a comprehensive decommissioning plan. The plan will determine resource needs as well as the scope, schedule and other elements of the decommissioning.

The company intends to use the SAFSTOR option for decommissioning. Generally, this involves placing the facility 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.

Additional specifics about the decommissioning plan are being developed and will be provided in the future.

Meeting customer needs

As it has done through the extended outage, Progress Energy Florida will continue to serve customers reliably in the coming years through a combination of power generation, energy efficiency and purchasing power in the energy market.

Meanwhile, the company is evaluating the potential to build a new, state-of-the-art, natural gas-fueled power plant, which could come online as early as 2018. There is no definitive plan for new generating capacity at this time.

Employees

Approximately 600 full-time employees work at the Crystal River Nuclear Plant. Many will remain onsite to work through the closing and decommissioning of the unit. The company will work with employees to help as many as possible make the transition to positions in other Duke Energy organizations.

The coal-fired units and employees are not affected by today's announcement.

As previously announced, the company expects to retire the two older coal-fired plants (units 1 and 2) in the coming years – most likely in the 2015-2018 time frame – due to changing federal regulations, but there is no specific retirement plan for the units today.

The company has invested more than $1 billion in recent years in adding advanced emission controls on the newer coal-fired plants (Crystal River units 4 and 5) and plans to continue to operate those units for many years to meet customer electricity demands.

Progress Energy Florida

Progress Energy Florida, a subsidiary of Duke Energy (NYSE: DUK), provides electricity and related services to more than 1.6 million customers in Florida. The company is headquartered in St. Petersburg, Fla., and serves a territory encompassing more than 20,000 square miles including the cities of St. Petersburg and Clearwater, as well as the Central Florida area surrounding Orlando. Progress Energy Florida is pursuing a balanced approach to meeting the future energy needs of the region. That balance includes increased energy-efficiency programs, investments in renewable energy technologies and a state-of-the-art electricity system. More information is available at www.progress-energy.com.

Headquartered in Charlotte, N.C., Duke Energy is a Fortune 250 company traded on the New York Stock Exchange under the symbol DUK. More information about the company is available at: www.duke-energy.com.