RALEIGH, N.C. (AP) - The largest U.S. electricity company said Tuesday it will permanently close a Florida nuclear power plant after botched repairs and use $835 million from an insurance settlement to refund consumers forced to pay for higher-cost replacement power.
Charlotte, N.C.-based Duke Energy said Tuesday it will close its Crystal River Nuclear Plant north of Tampa, starting a process that may take 60 years before the site is decontaminated and dismantled. The company said it is considering whether to build a new, natural-gas-fueled power plant to replace the power lost by closing the nuclear plant.
The nuclear plant operated by Duke Energy's subsidiary Progress Energy Florida has been shut down since 2009, when its concrete containment building cracked during a maintenance and upgrade project. A 2011 repair attempt resulted in new cracks in other parts of the containment structure. Estimates put repair costs at between $1 billion and $3.4 billion.
"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," Duke Energy Chairman and Chief Executive Jim Rogers said in a statement.
Rogers' expected successor following Duke Energy's merger last July with Raleigh-based Progress Energy, which owned Crystal River, was unexpectedly fired within hours after the combination was completed. Duke Energy board members said they dumped former Progress Energy CEO Bill Johnson in part because of dissatisfaction over his handling of the Crystal River closing.
Progress Energy Florida provides electricity to more than 1.6 million Florida customers, including the cities of St. Petersburg and Clearwater and the area surrounding Orlando.
Florida utilities regulators will decide when customers see refunds to compensate for higher bills Progress Energy passed along because it had to replace electricity not produced by the nuclear plant with higher-priced power.
Florida's Public Service Commission last February allowed a $150 million increase in base rates but directed Progress Energy Florida to refund customers $288 million over two years for costs related to the nuclear plant shutdown. That money started to be included last month, in addition to $100 million because repairs on Crystal River had not begun by the end of 2012.
Duke Energy spent $338 million through the end of 2012 to repair the nuclear plant, $143 million of which was covered by payments from its insurer, Nuclear Electric Insurance Ltd., spokesman Mike Hughes said. How much of the cost to close the plant will be covered by customers or absorbed by shareholders will be decided by Florida regulators, he said.
"The ultimate allocation of those costs will be determined in the future, so I don't have any specific percentage that we anticipate that customers might pay, a specific percentage that we anticipate shareholders might pay. That will be determined by the proceedings" convened by state regulators, Hughes said.
The Nashville, Tenn.-based Southern Alliance for Clean Energy said it applauded Duke Energy for its decisive decision to close Crystal River.
"Crystal River clearly demonstrates the vulnerabilities of being overly dependent on a high-risk energy source like nuclear power, which exposes ratepayers to high financial risks and residents to unnecessary health and environmental risks," Executive Director Dr. Stephen Smith said.
Duke Energy has 7.1 million customers in Florida, North Carolina, South Carolina, Ohio, Kentucky and Indiana.
Emery Dalesio can be reached at http://twitter.com/emerydalesio
(Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)