pinion Duke Comes Up Short With Progress

BRADENTON -- In 2009, when the Crystal River nuclear power plant reactor was shut down to replace deteriorating steam generators, workers discovered cracks in the 42" thick containment walls. Many times since, Progress Energy has been forced to deal with one costly problem after another. This time, there seems little doubt that the problem is due to human error; what was missing from the fixing was the truth. Did Progress Energy duke Duke? 

It would seem that the question is when and how much did Duke and/or Progress know about the actual condition of the plant, and did both think if it all just stayed quiet, they could continue to push what might become over $5 billion in mistakes onto the pocketbooks of their customers?

With over a billion dollars in generator replacement cost, more that $2 billion in containment repairs and $300 million annually going toward buying supplemented energy for their customers, where is it all to end? Certainly not with former Progress Energy CEO Bill Johnson, who was made CEO of the newly wed Duke-Progress Energy. Johnson didn't stick around long enough for his morning coffee to get cold. He was replaced with Duke's former CEO Jim Rogers, after just one day on the job.

It is unknown whether there was a prenuptial agreement, but Johnson left with a $44 million dollar cookie jar. That included a $10 million severance -- some not so old and other new stock options -- plus a $1.5 million bonus, perhaps to make sure he didn't kiss and tell secrets.

Oddly, it was Johnson's replacement who spilled the beans. Rogers revealed that the board lost confidence in Johnson, largely for the way he handled the Crystal River fiasco. From the beginning, when the generator replacement began, secret meetings and lax reporting of critical events fostered suspicions. 

Skepticism to the actual cost grew deeper when Florida regulators and Progress Energy refused public participation in the agreement both reached in January of this year. On June 25th, one week before the merger deal was sealed, Duke delivered a secret report, it requested from Progress, to its board members, revealing the sequence of events at Crystal River, and their true cost. It was there many believe, that Johnson's fate was sealed.

In Florida, it is clear that we have traded in our watch-dogs for lap-dogs. To date, the big losers are Progress Energy customers. The Nuclear Regulatory Commission (NRC), the Public Service Commission (PSC) and Florida regulators have allowed Progress to veneer their mistakes, shield their losses and push the cost of their self-made blunders on to customers. It would be prudent for Duke Energy stockholders to reexamine the losses and troubles ahead, which they have bought into.

If malfeasance was committed by either of the power companies, the regulatory commission and/or oversight committees, all contract agreements should be voided out, while any and all expenses that have been forced upon Progress customers should be returned, while a play by play account of every setback, with a tally of cost is provided to the public. Anything short of such measures should be seen as not only unacceptable, but criminal.

What Progress fears most is how much this is going to affect its proposed Levy County nuclear plant. Not yet a done deal, the $24 billion price-tag has concerned customers wondering what they are really paying for and how much that cost will escalate. Currently, Progress customers are already paying-forward to build the plant, among growing opposition.  

How can the public now be expected to lend its trust after so much misrepresentation and deception? The first two cracks at the Crystal River plant were discovered over a year apart, one in October of 2009, another in March 2011. After those, the cracks in the containment walls just kept on coming, and the cracks in the truth started to show as well.  

The NRC reported that test results revealed further compromises to the containment walls in July of 2011. It was then that workers looked and found a crack 12 feet long and 4 feet wide. The next month, Progress failed to mention the incident in their report to the Public Service Commission. PSC wasn't informed of that problem until later in October. To date, no action has been taken for that blunder. 

Progress did report the additional damage to the U.S. Securities and Exchange Commission (SEC) at that time, knowing the SEC might not be so forgiving, in defense of stockholders. 

Specialists throughout the industry have said from day one that there will be problems with the Crystal River Plant. The reactor building first cracked in 1976 when the plant was built. Criticism to the amount of reenforcement steel used in the plagued containment walls surfaced when it was discovered that they were one quarter of what is used for other plants. The cost of bring the plant into compliance (but not necessarily safe condition) could be many billions more .

A little over a year ago, The Bradenton Times (TBT) reported on the conditions and perils of the Crystal River Nuclear Power Plant. There, we demonstrated what the amount squandered by Progress Energy might have offered the citizens of this state. We presented an alternative: for every $1 billion spent, 200,000 homes could be equipped with solar panels that could reduce their electric bill by one third to one half the current cost. 

The $10 billion ($5 billion to date and $5 billion more unless it's scrapped) in costs that Progress will spend, could equip two million homes (that is 20 percent of all of the occupied homes in Florida) with an average monthly savings of $50 a month. The $10 billion would eventually be recouped by Progress through rate hikes anyway, doubling again future savings.

This would create over 200,000 jobs, which might save tens of thousands of houses from foreclosure, put or keep that many on, or back onto the books to collect property taxes. The opportunities are a virtual up-hill snowball for revenue, creating even more jobs. 

What is it about billion dollar blunders that doesn't say economic recovery?

If we are going to keep repeating the same mistakes, and not invest in what will actually save the consumer money that can be more efficiently spent into the economy, produce jobs, and keep many more from falling into poverty, what are our options? 

● In Brazil, prisoners peddle stationary bikes, to charge car batteries that light the street lamps, reducing their prison time. A plug-in chain gang. 

● Some have suggested "debtors' prisons" return to the judicial landscape. With so many falling into poverty, maybe they could peddle their way out.

Could that be the Duke/Progress Energy back-up plan? I'm not sure, but there seems to be little for their captive consumers in their current business model beyond being held dry at every turn. Is there no shame?