Monday, February 18, 2013

Electricity Monopoly Ripoff: Captive Florida Ratepayers May Pay $4 Billion For Inoperable Nuclear Plant

Here is a true tale from Florida proving once again that electricity generation monopolists can inflict immense financial pain on their captive electricity customers. The tale also shows why only utilities with government-granted generation monopolies and captive ratepayers to pay for immense capital costs are building the very few nuclear plants currently under construction.

The 860 MW Crystal River nuclear plant in Florida has not operated since 2009 when an effort to upgrade the plant went terribly wrong. "The company that owned the nuclear plant, Progress Energy, messed up in a big way. In an effort to upgrade the plant's steam turbines, company employees cracked the reactor's containment building. When they tried to fix it, they cracked it again."

For some reason not clear to me, Duke Energy decided to buy Progress Energy, a deal that was completed last year but blew up into a front-page regulatory drama.  A report commissioned by Duke Energy about what it would take to really fix Crystal River found that it would cost $3 billion and 8 years to do so.

For the $3 billion cost of repairing the 860 MW Crystal River Plant, more than 3,000 megawatts of new, gas-fired electricity generation could be built. Given that repair bill, Duke Energy has decided to close forever Crystal River.

And now the pain really begins for Duke Energy's 1.5 million, still captive electricity customers in Florida.  As NPR reported, "It's those customers, not the company or its stockholder, who will pay the bill from Crystal River--and it's a big one."

The costs of closing Crystal River are enormous--$4 billion is one estimate--and include plant decommissioning expense and the cost of buying power to replace the electricity not generated by the nuke.  Even though the plant has not been producing power for nearly 4 years, is not now, and will never again produce a single kilowatt-hour, the captive ratepayers in Florida are likely to pay most of the bill for a nuclear plant gone terribly wrong.

That injustice is at the heart of why I led the successful effort in 1996 to end electricity generation monopolies in Pennsylvania.  In Pennsylvania, where electricity customers have a legal right to buy electricity generation from any willing supplier, the Crystal River ripoff is not possible!


  1. John, great story -- and thanks for making Penn residents able to switch utilities. Is your state the only one in the US where that is possible?

    1. Pennsylvania is not the only state to have abolished state generation monopolies. PA and every state still has distribution or transmission monopolies that are state regulated. One wire to the home or business and a state monopoly preventing another company from stringing a line is the norm everywhere. But about a third of the states allow customer to choose from what company they will buy the electricity that comes over that single line.