Summary
Duke Energy Corporation (DUK), through its subsidiary Florida Power Corporation d/b/a Progress Energy Florida, Inc. (PEF), announced the intention to retire the Crystal River 3 (CR3) nuclear power plant. This decision is expected to result in an approximate $195 million in impairments for PEF in the fourth quarter of 2012, primarily related to balances allocated to wholesale customers. For Duke Energy, this will be reflected as an increase in goodwill associated with the prior acquisition of Progress Energy, Inc. Furthermore, PEF has reached a settlement with its insurance carrier, Nuclear Electric Insurance Limited (NEIL), resolving insurance coverage claims. Under this agreement, NEIL will pay a total of $835 million to PEF, comprised of $530 million from the recent settlement in addition to $305 million previously paid. The recovery of the retail investment in CR3, including carrying charges, will be sought from customers over a 20-year period, not commencing before 2017, subject to Florida Public Service Commission (FPSC) review.
Key Highlights
- 1Duke Energy (DUK) announced the retirement of the Crystal River 3 (CR3) nuclear power plant by its subsidiary PEF.
- 2PEF expects to record approximately $195 million in impairments for Q4 2012 related to CR3 plant balances.
- 3The retirement decision will result in an increase to goodwill for Duke Energy related to the Progress Energy acquisition.
- 4PEF settled insurance coverage claims with NEIL for a total of $835 million ($530 million new payment + $305 million prior).
- 5PEF will seek to recover the retail investment in CR3 from customers over 20 years, starting no earlier than 2017.
- 6Regulatory review by the Florida Public Service Commission (FPSC) is pending for both the retirement and insurance settlement.
- 7The ultimate outcome of the FPSC regulatory dockets remains uncertain.