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Florida nuclear plant remains shut down

When you hire a repairman you hire them because they have the expertise to fix a specific problem. Now imagine, hiring a company to fix a nuclear plant, only to find out that their inexperience in this type of repair, has resulted in your plant being shut down. Now, they would like to be paid for their services, even though the result is a non-working nuclear facility.

Contract disputes are always complicated, but when the dispute involves a nuclear plant, it makes us all stand up and take notice. Progress Energy, which owns The Crystal River nuclear plant on the west coast of Florida, has been shut down since the fall of 2009. The dispute involves a botched attempt to replace the plant's steam generator. Progress Energy, in an effort to save money, hired an engineering firm to replace the generator. The result of the engineering firm's work was three instances of "delamination," which is an internal separation of the building wall. Each of these separations is the size of a basketball court.

The results of these mistakes have put the Crystal River nuclear plant in crisis mode. The insurer of the nuclear plant, Nuclear Electric Insurance Limited, is trying to decide if it is obligated to pay approximately $2.75 billion for the repairs and replacement power under its contract with Progress. NEIL was not expected to pay the full coverage that Progress sought for these repairs last year, and has since suspended recording further insurance receivables in its corporate accounting statements. To date, Progress Energy has received $298 million in insurance payments and the company has stopped working on the Crystal River site to focus on its refining strategy and budget.

While Progress Energy feels that it's not in a dispute phase, the bill for repairs and replacement of this nuclear facility could reach $2.5 billion. It's unclear who will cover these costs. The company is awaiting a decision from the insurer as to whether the claims will be paid for or whether Progress Energy will have to appeal to an arbitrator.

The continued closure of Crystal River could result in steep bill increases for Florida customers who already pay approximately $124 a month for power.

Source: HispanicBusiness.com, "Nuclear Fiasco in Florida Vexes Progress Energy," John Murawski, Mar. 1, 2012

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