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Florida Regulators Approve Duke Nuclear Recovery Financing

The Florida Public Service Commission approved financing for Duke Energy Florida (NYSE: DUK) to recover costs for the 860-MW Crystal River 3 nuclear power plant.
 
The financing allows Duke to issue a securitization bond to help reduce customer burden by nearly $708 million for the plant’s closing. Duke said it plans to offer the Nuclear Asset Recovery Bonds to investors through a public offering registered with the Securities and Exchange Commission. The funds received will help recover the amount of the regulatory asset of CR3.
 
Duke filed the plan with the PSC on July 27 to assess customer fees for up to 20 years and sell this income stream to a “special purpose entity” that will use the fees as collateral for bonds.  The nuclear asset recovery charge will be paid by all existing and future customers receiving transmission or distribution services from Duke Energy Florida.
 
Crystal River 3 shut down in 2009 for a steam generator replacement project when the containment building was damaged. Additional cracks were discovered in the containment building in 2011. Duke acquired the plant after the merger with Progress Energy was completed in July 2012. The following year, Duke decided it would be too expensive to repair the containment building and decided to shut down the unit. A report by Zapata Inc. said that, in a worst-case scenario, it would have cost more than $3 billion to repair the damage to the containment building.
 
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