nuclear-news

An ugly story – Chrystal River nuclear plant – a national financial headache

Utility companies pass those costs onto their customers, making
Crystal River’s failed do-it-yourself maintenance project a nationwide
responsibility…… And Crystal River isn’t the only concern. Most of
the 104 reactors in the United States were built in the 1970s and
early 1980s. They are starting to show their age, a fact that is
adding additional pressure to NEIL’s bottom line.

The insurance company is processing claims from American Electric
Power’s nuclear station in Bridgman, Mich., the South Texas Nuclear
Project and California’s San Onofre nuclear power station.

Adding in Crystal River, NEIL and its member utilities — and by
extension their customers — are potentially looking at a huge
financial hit.    ” This,” said Cooper, the economist, “is an ugly story.”

Progress Energy Shares the Costly Pain of a Fix at Nuclear Power
Plant, News Chief.com By IVAN PENN TAMPA BAY TIMES, January 2, 2013
The crippled Crystal River nuclear plant, owned by Progress Energy, is
now America’s headache. The bill to fix it and pay for replacement
power may top $5 billion. The problem?

The company that insures all 104 U.S. nuclear power plants has just
$3.6 billion on hand to pay for claims.

Broken nuclear plants in California, Texas and Michigan will vie for
some of that money. But Crystal River alone represents such a
financial threat that the insurance company, Nuclear Electric
Insurance Ltd., may demand that its member utilities pony up more
money. And it could be a lot more — and quickly. NEIL is allowed to
raise as much as $2 billion from its members in just 20 days, said
insurance rating and information agency A.M. Best Co. Inc., in a
recent report on the insurer.

NEIL has remained mum on how it will proceed, but it has acknowledged
that the damaged Crystal River plant is one of the industry’s
“high-visibility events” along with, among others, Japan’s Fukushima
Daiichi nuclear disaster. It is also the largest claim in NEIL’s
30-year history.

“The Crystal River … damage clearly is a significant matter for
Progress Energy, and is a potentially material claim for NEIL,” the
Bermuda-based insurer noted. The company added that there remains
“substantive financial uncertainty stemming from the ongoing review of
the Crystal River claim.” Mark Cooper, senior research fellow for
economic analysis at the Institute for Energy and the Environment at
Vermont Law School, viewed NEIL’s assessment as ominous……
At stake is the future of Progress Energy Florida’s sole nuclear
plant….. Progress and its new parent company, Duke Energy, must
decide whether to repair the plant or permanently shut down the
reactor……..
Duke Energy became so troubled about Crystal River that the utility
cited the broken plant as one of the reasons the company fired former
Progress Energy CEO Bill Johnson just hours after he took control of
the merged companies on July 2. The utility’s board members said they
had a “loss of confidence” in Johnson in part because of the handling
of the nuclear fleet.

Arnie Gundersen, a nuclear engineer who serves as an expert witness on
utility matters before state and federal regulators, said he cannot
see NEIL paying the full tab for repairs or replacement power on the
plant.

“I don’t think they want to establish the precedent,” Gundersen said,
“of paying for one member’s screwup.”…… As a mutual insurance
company, NEIL’s members agree to cover each other in the event of a
catastrophe. NEIL, which formed in 1980 in response to the Three Mile
Island disaster and later merged with an older nuclear insurer,
Nuclear Mutual Limited, can draw on the owners of all 104 nuclear
plants in the United States……  NEIL could also charge the power
companies hundreds of millions more to cover any shortfall the insurer
faces from claims.

Every utility insured by NEIL agrees to pay as much as 10 percent of
its annual premiums to cover claims that exceed NEIL’s available cash.
Those payments can reach a total of $2 billion, based on premiums
power companies pay, A.M. Best stated in its report on NEIL.

SHIFTING COSTS

Utility companies pass those costs onto their customers, making
Crystal River’s failed do-it-yourself maintenance project a nationwide
responsibility…… And Crystal River isn’t the only concern. Most of
the 104 reactors in the United States were built in the 1970s and
early 1980s. They are starting to show their age, a fact that is
adding additional pressure to NEIL’s bottom line.

The insurance company is processing claims from American Electric
Power’s nuclear station in Bridgman, Mich., the South Texas Nuclear
Project and California’s San Onofre nuclear power station.

Adding in Crystal River, NEIL and its member utilities — and by
extension their customers — are potentially looking at a huge
financial hit.

” This,” said Cooper, the economist, “is an ugly story.”
http://www.newschief.com/article/20130102/NEWS/130109898/1003/news01?p=1&tc=pg&tc=ar

January 3, 2013 - Posted by Christina Macpherson | business and costs, USA