Summary
Duke Energy Corporation (DUK) announced on February 5, 2013, its decision to retire the Crystal River 3 (CR3) nuclear power plant. This decision, made by its subsidiary Florida Power Corporation d/b/a Progress Energy Florida, Inc. (PEF), will result in an approximate $195 million impairment charge recognized in the fourth quarter of 2012, primarily related to plant balances allocated to wholesale customers and other provisions. This impairment will be recorded as an increase to goodwill in purchase accounting stemming from the Duke Energy acquisition of Progress Energy, Inc. Furthermore, PEF has reached a settlement with its insurance carrier, Nuclear Electric Insurance Limited (NEIL), for $835 million in total insurance proceeds ($530 million in addition to the $305 million already received). PEF plans to seek recovery of the retail investment in CR3, including accrued carrying charges, over a 20-year period, not commencing before 2017, subject to Florida Public Service Commission (FPSC) review. The full impact and recovery mechanisms are subject to ongoing regulatory proceedings.
Key Highlights
- 1Duke Energy to retire Crystal River 3 (CR3) nuclear power plant.
- 2Approximate $195 million impairment charge to be recorded for Q4 2012 related to CR3.
- 3Impairment recognized by PEF will increase goodwill in purchase accounting for the Duke Energy acquisition of Progress Energy.
- 4PEF reached a settlement with NEIL for a total of $835 million in insurance proceeds.
- 5PEF plans to seek recovery of CR3 retail investment over 20 years, starting no earlier than 2017.
- 6Recovery and retirement decision are subject to Florida Public Service Commission (FPSC) review in upcoming regulatory dockets (Phase 2 and Phase 3).