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Duke Energy Puts Brakes on Nuclear in Fla.; Natural Gas May Step Up

Duke Energy (NYSE: DUK  ) announced a series of revised agreements with Florida regulators yesterday, rearranging its future energy options in the Sunshine State.

The numbers have been crunched on Duke's decision to retire its faulty Crystal River Nuclear plant. The utility had previously announced that it (and, by extension, its customers) would receive $835 million in insurance proceeds, but Duke now plans to write off $295 million in associated closure costs.

As Crystal River closes, regulatory holdups and low power prices have pushed Duke to pull back on previous plans to construct two new 1,100 MW nuclear units in Levy County, Fla. This decision adds an additional $65 million in write-offs  to Duke's Q2 pre-tax charges.

Duke says it is scuttling plans to build a $24.7 billion nuclear power plant in Levy County because of delays by the Nuclear Regulatory Commission in issuing licenses for new plants, and because of recent legislative changes in Florida.

But Duke did not close the door entirely on the Levy County project, saying it will still pursue a NRC license for the plant, something Duke could receive in late 2014 or 2015, said Alex Glenn, Duke Energy's state president in Florida.

As Duke Energy divests from nuclear, it's also considering the costs of 875 MW of unscrubbed ("dirty") coal capacity. With stringent environmental regulations pushing up compliance costs, these facilities might be headed for early retirement, the company indicated.

Looking ahead, Duke is eyeing natural gas to replace its cut capacity. Regulators have approved 1,150 MW of gas-fired generation with an opening date before 2018, and the utility has the option to ask for another 1,800 MW by 2019.

-- Material from The Associated Press was used in this report.

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9/23/2016 4:00 PM
DUK $82.52 Up +0.01 +0.01%
Duke Energy CAPS Rating: ***