Duke Energy Corporation
) business wing Progress Energy Florida announced that it will
permanently put the shutters down on the Crystal River Nuclear
Plant ("CR3") located in Citrus County, Florida.
Although a late 2012 report established the viability of
refurbishing the plant, uncertainty regarding the nature and
scope of repairs led the company to arrive at this decision. The
company's estimated cost of maintenance and repairs of the plant
came to $1.3 billion to $3.4 billion. After the nuclear plant
catastrophe in Japan in 2011, nuclear operators in the U.S. have
increasingly focused on abiding by safety procedures.
The nuclear facility has been idle from the fall of 2009 owing
to a crack on the outer layer of the wall of the containment
building. The crack occurred during refueling and replacement
works on the steam generators. In 2011, Duke Energy's efforts to
repair the containment damages turned futile when new fractures
emerged in other parts of the containment building.
The company is contemplating to construct a high-tech natural
gas-fired facility in place of the plant, which could come into
service by 2018. It is also evaluating prospective sites,
including Citrus County, for new plant capacity additions needed
to meet rising customer demand in the future. The other
four coal plants in the energy center will however keep running
for the time being.
Apart from this, the company and its insurance agent Nuclear
Electric Insurance Limited ("NEIL") reached an agreement for
coverage claims in which Duke Energy will receive $835 million.
The company intends to utilize the proceeds to refund its
consumers via reduction in electricity rates.
Duke Energy is reviewing plans for decommissioning the plant
and expects the entire closure to take around 40 to 60 years. The
company aims to recuperate the investments of $1.65 billion in
Crystal River in 20 years by seeking rate hikes from the
Of late, the company has been aggressively taking steps to
redress its escalating cost structure and has retired two of its
coal fired units in the Charlotte area, namely, the Buck and
Riverbend stations in the wake of environmental regulations. The
company's North Carolina business has also filed for a rate
increase to the regulatory body.
Going forward, we believe the closure of the nuclear plant
will lead to substantial cost savings for the company thereby
improving margins. Moreover, the company will derive significant
benefits from its natural gas assets given its recovering
However, possibility of a negative ruling in the rate hike
case and weather variations could deter the company's growth
goals. Currently, Duke Energy carries a Zacks Rank #3 (Hold). We
presently prefer the Zacks Rank #1 utilities
DTE Energy Company
Pike Electric Corporation
Based in Charlotte, NC, Duke Energy together with its
subsidiaries generates, distributes and sells electricity through
nuclear, coal-fired, hydroelectric, combustion turbine, and
combine cycle stations.
AMEREN CORP (AEE): Free Stock Analysis Report
DTE ENERGY CO (DTE): Free Stock Analysis
DUKE ENERGY CP (DUK): Free Stock Analysis
PIKE ELECTRIC (PIKE): Free Stock Analysis
To read this article on Zacks.com click here.