Wednesday, July 04, 2012

Bill Johnson Ousted as Duke Energy CEO Due To Nuke Problem

Bill Johnson
Bill Johnson was unexpectedly replaced Jim Rogers in the just completed merger between Duke Energy and Progress Energy.  Johnson was CEO of Progress and Rogers is Duke's CEO.  Johnson’s ability to lead was probably called into question over his handling of repairs at Progress’s Crystal River 3 nuclear reactor in Florida. 

Crystal River 3 Nuclear Power Plant Problem

About three months after the proposed acquisition by Duke was announced, Progress disclosed unexpected damage to the reactor’s containment building while crews were repairing an earlier crack. There were reports last year that Progress engineers further damaged the facility by attempting to fix cracks in its concrete shell by themselves.  According to the newly merged company, resolving the cost of the repairs to be covered by insurance, shareholders and utility customers will be the company’s third priority after cutting costs and improving efficiency as the two companies combine operations.

Crystal River 3 Nuclear Plant

The 860-megawatt Crystal River nuclear power plant, in Citrus County, was shut down in September 2009 when workers discovered a series of cracks after cutting a hole in the plant's concrete containment building. The hole was cut in order to replace the plant's aging steam generators. Moreof cracks in the concrete containment building were later discovered and Progress officials have said the unit won't restart until 2014 at the earliest. Progress' Florida utility has been expected to announce this month whether it will repair the damaged reactor or shut it down. The cost of the difficult repair has been estimated at between $900 million and $2.5 billion.

Crack in Containment Dome Along Larger Rebar

Duke Energy will probably seek a relicensing permit for Crystal River, which means extending the life of the plant from 2016 to 2036. Of course, Duke Energy will spend $1-$2 billion to fix the damaged nuclear plant. But the company still lacks an explicit okay from the Nuclear Regulatory Commission to run the plant until 2036.

Progress Energy Florida is owned by Progress Energy of Raleigh, which has now merged with Duke Energy of Charlotte.   (Bloomberg, 7/3/2012, Reuters, 7/4/2012, Tampa Bay Times, 12/4/2011)

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