Duke Energy Writes Down $360 Million Over Crystal River Plant

Duke Energy Corporation will take a $360 million charge against earnings as part of a settlement with Florida's consumer advocate over how the utility will recover nearly $2.5 billion worth of expenses related to the nonworking Crystal River nuclear power plant. As a result of the settlement agreement announced Thursday with the state's Office of Public Counsel, Duke said it would take a $295 million charge related to the retirement of its Crystal River nuclear reactor and $65 million related to its decision to end efforts to build a new reactor in Levy County, Fla., about 120 miles north of Tampa.  Without the agreement, it is likely those costs would eventually have wound up in customers' bills.

The settlement, which still must be approved by state utility regulators, caps at $1.46 billion the amount that Floridians can be asked to pay for Crystal River, which is also north of Tampa on Florida's Gulf Coast. The plant's premature retirement, due the structural problems, was announced last February.

The deal also establishes that the expense won't be added to customer rates until after the utility has quit charging customers for money it is owed for the now-terminated Levy County nuclear project, possibly after 2017 or 2018.

Duke's Florida utility unit said the utility has spent about $1 billion on the Levy County project but so far had collected only $743 million from customers through June 30. The agreement was a good one for consumers and the utility because "it provides long term clarity about how nuclear expenses will be handled.  Though it ends ongoing legal wrangling between the utility and the state's chief utility advocate, the settlement means that consumers will pay nearly $2.5 billion for plants or projects that aren't generating electricity.

The utility also confirmed on Thursday that it has received $835 million from a nuclear insurance fund to compensate it for damage to the Crystal River reactor.  (WSJ, 8/1/2013)