By John Stang
The upcoming decommissioning of the Crystal River nuclear power plant needs more government oversight, some type of independent monitor, and better guarantees against cost overruns, a Florida government watchdog agency told the state Public Service Commission last week.
“We ask you to order some modest changes” in the decommissioning contract, Charles Rehwinkel, an attorney for the Florida Office of Public Counsel, said during the commission’s three-day hearing on the matter, which resembled a legal deposition at times.
Duke Energy Florida last year signed a $540 million contract to have Accelerated Decommissioning Partners (ADP) tear down the retired single-reactor facility in Citrus County by 2027. That would be decades earlier than previously scheduled, though the price does not include long-term management of spent fuel in on-site dry storage.
Accelerated Decommissioning Partners is a joint venture of demolition specialist NorthStar Group Services and Orano USA, the domestic branch of French nuclear company Orano (formerly AREVA). The ADP subsidiary tackling Crystal River Unit 3 is dubbed ADP CR3.
The contract between Duke and ADP must be approved by the Florida Public Service Commission.
The Office of Public Counsel is a Florida state agency assigned to look after the interests of the ratepayers of state’s utilities. The agency wants the following changes to the Duke-ADP contract:
- The state of Florida should have regulatory authority similar to those of the Nuclear Regulatory Commission to give the state extra clout in regulating the cleanup;
- The parent companies of ADP must keep at least $105 million in reserve to deal with cost overruns and unexpected expenses to help deal with fears that cost increases above $540 million could lead to rate hikes to find the extra needed money.
- ADP would be required to provide monthly reports on its decommissioning progress and its financial condition;
- An independent monitor must be established to oversee the decommissioning and financial status of the contractor. The OPC wants the last two measures so future problems at Crystal River could be identified early.
Duke and ADP oppose those proposed changes, with Duke attorney Dianne Triplett saying they are not needed.
The Florida Public Service Commission will discuss this matter again on Aug. 18. When the commission makes its decision, it will have 20 days to file its order.
Going online in 1977, Crystal River Unit 3 shut down permanently in 2013 due to damage to its containment building.
Due to the cost of repairing the facility, Duke placed the reactor into SAFSTOR mode in 2015, under which final decommissioning could be delayed for up to 60 years. The estimated cost for that approach was $895.9 million. The Charlotte, N.C.-based power company in 2019 switched to an accelerated, less-expensive decommissioning plan that would tear down the reactor and haul away the debris by 2027.
In March 2020, Duke’s decommissioning trust fund for Unit 3 had a balance of $741.5 million, according to the Nuclear Regulatory Commission. Under the decommissioning contract, Duke would keep ownership of the Crystal River site and pay ADP CR3 as it completes milestones in the cleanup job. However, ADP CR3 would take ownership of the plant’s independent spent fuel storage installation. Duke has declined to say how much fuel is in dry storage, citing security concerns.
During the hearing, Triplett said Duke already has more than enough money set aside to take care of potential financial issues — with the $540 million fixed-price contract safeguarding ratepayers from future rate hikes due to Crystal River.
Rehwinkel countered that safeguards against future rate hikes are not as ironclad as Triplett portrayed them — saying unexpected decommissioning expenses could bring rake hikes back into play.
The majority of last week’s hearing was set up like a legal deposition, with representatives of the various parties answering the other’s questions under oath. The bulk of the hearing consisted of Rehwinkel questioning Scott State, who is simultaneously CEO of ADP and co-parent NorthStar Group Services.
Rehwinkel voiced concern about NorthStar Group Services being owned by a Wall Street private equity firm, J.F. Lehman & Co., saying that company’s investors could influence decisions that could ripple financially down the corporate family tree to ADP CR3. He did not cite specific examples of how this could happen beyond Lehman’s first loyalty being to its investors’ pocketbooks.
On liability for cost overruns, State said ADP posted $500 million in revenue in 2018. In the corporate family tree, ADP is a holding company for three subsidiaries including ADP CR3. NorthStar Group Services and Orano Holding Corp. are ADP’s corporate parents, with NorthStar holding a 75% share. Several corporate entities exist between NorthStar Group Services and Lehman — with the financial liability for CR3 overruns extending only up to NorthStar Group Services, State testified last week.
Rehwinkel also focused on ADP’s and NorthStar experience in leading a decommissioning project of the size of Crystal River.
NorthStar and LVI Services, which helped create NorthStar in 2014, have a track record of dismantling five small academic reactors and some small test reactors at the Department of Energy’s Hanford Site in Washington state. They have also conducted some radioactive cleanup at three other DOE sites – Which sites? All of these successful projects are tiny compared to Crystal River, Rehwinkel noted. Orano, or predecessor AREVA, have decommissioned five reactors.
NorthStar in January 2019 completed the acquisition of its first commercial reactor, the retired Vermont Yankee plant, for decommissioning. In Vermont, NorthStar owns the reactor, and Orano is a subcontractor for that project.
Crystal River is the first venture of the ADP team. In this case, Duke owns the site, and NorthStar and Orano — in the form of ADP — jointly manage the entire project.
In a Wednesday written statement, State said: “The Nuclear Regulatory Commission’s approval of the plant’s license transfer rests on a careful and exhaustive review of ADP’s financial assurances and technical capabilities. ADP’s contract with Duke Energy includes multiple financial safeguards – such as insurance and bonding requirements. These contract provisions, coupled with ADP’s conservative, experience-based estimates of decommissioning costs, hedge against the unlikely worst-case scenarios of cost overruns related to parent-company guarantees discussed at the Florida Public Service Commission hearings.”
