Crystal River's Controversial Repairs Central to Duke Energy Hearings
As hearings into Duke Energy's surprise ousting of CEO William D. "Bill" Johnson wrapped up July 20, a pending repair project at the troubled Crystal River nuclear powerplant remained a leading suspect for the boardroom shake-up. However, it remained unclear whether the North Carolina Utilities Commission would examine the matter further.
In his testimony on July 19, Johnson alleged that Duke had tried to scuttle the merger with Progress Energy, of which he had been chairman and CEO. As part of the deal, Johnson, 58, was named CEO but was ousted less than 24 hours after the merger closed on July 2.
Additionally, Johnson rebutted the comments of Duke’s new CEO, James Rogers, and director Ann Maynard Gray, who both testified that Johnson’s poor communication of repair and insurance issues at Progress Energy’s Crystal River plant led to the board’s quick action.
“I did not fail to inform anybody about anything,” Johnson said, adding that he “absolutely” informed Duke about the repair issues at the 914-MW plant. Moreover, he added, it was at the behest of Duke officials that Progress slowed down negotiations to resolve repair claims with Nuclear Electric Insurance Ltd. [NEIL], an industry insurer. Rogers had previously testified that Duke had been surprised that negotiations over related insurance issues were still ongoing at the time of the July 2 merger, implying a connection to Johnson’s ouster.
Crystal River has been idle since 2009, and, according to Johnson, needs an estimated $1.3 billion in repairs for cracks at one of the containment buildings.
But Jim Warren, executive director of the North Carolina Waste Awareness and Reduction Network [NC WARN], Raleigh, believes a study initiated by the Duke board will show that the cost to repair Crystal River is much higher than Johnson previously stated.
In its own filings to the commission, the North Carolina consumer watchdog urged the regulatory body to obtain the secret study, arguing: “Without a full study and repair plan, the estimate may be so hypothetical as to be unfounded, and actual costs could be significantly higher.” Johnson testified engineering for repairs was about 85% complete and that the work could cost about $1.3 billion, a figure he first announced in early 2011, when engineering was just beginning.
NC WARN further contends that costs related to Crystal River could diminish Duke Energy’s bond rating and increase the cost of borrowing for capital projects. The group asserted that Zapata Engineering, Charlotte, N.C., is handling the study, but neither Duke nor Zapata would comment.
Despite the prominence of Crystal River in the hearings, the regulatory body has not yet decided whether it will be necessary to review the study, Sam Watson, the commission’s general counsel, told ENR.