The high-drama managerial shift that followed the $32 billion mega-merger between Progress Energy Inc. and Duke Energy Corp. has left looming questions about who will lead the combined utility and the fate of an embattled nuclear reactor on Florida's Gulf Coast.

Duke Chairman and CEO Jim Rogers told Florida regulators yesterday he is not sure how long he will lead the new company and that his current contract expires next year.

Rogers, a former federal regulator and utility executive, said a board of Duke and Progress officials asked him to step in and oversee the merger last month after Progress CEO Bill Johnson was fired on July 2, the same day the two companies merged, creating the largest electric utility company in the United States.

"I serve at the pleasure of the board," Rogers told the Florida Public Service Commission at a hearing in Tallahassee yesterday. "This is the third combination I've been through, and they've asked me to step in; I was on the road to be being executive chair."

Rogers' swift appointment pulled him away from raising money for the upcoming three-day Democratic National Convention in Charlotte, N.C. It also set off a flurry of investigations and lawsuits, and the North Carolina Utilities Commission and state attorney general are now looking into whether shareholders were duped post-merger (Greenwire, July 26).

At the center of the turmoil are looming questions about multimillion-dollar repairs facing the embattled Crystal River 3 nuclear reactor on Florida's Gulf Coast. The former Progress plant near Crystal River, Fla., has been sitting idle for about three years after workers found cracks in a concrete building that surrounds and shields the reactor (Greenwire, July 13).

Johnson told North Carolina regulators last month he was fired after top executives disagreed and became frustrated about merger transaction costs and considered using the Crystal River plant as a way of sidestepping the merger (Greenwire, July 20).

On the other side, Rogers said last month that Johnson was fired because of his "autocratic" management style and his commitment to fixing up the embattled Crystal River plant. Rogers said yesterday that addressing the problem at Crystal River is now his highest priority.

It is not clear whether the combined company will repair the plant -- at a cost of up to $1.3 billion and rising -- or whether the facility will be shuttered for good, Rogers told regulators yesterday. The companies are waiting to see how much insurance they can collect to repair the plant, he said.

Mark Cooper, a senior fellow at the Institute for Energy and the Environment at Vermont Law School, said it is unclear what agreement the companies had reached for dealing with the nuclear plants and that Crystal River was a "cash cow" that now needs millions of dollars in repairs.

"Old nukes are getting to be a big pain in the ass for some utilities; the notion that they hum along forever and you turn them off when they're cash cows" isn't true, Cooper said.

Who pays?

Jim Warren, executive director of NCWarn, an environmental watchdog and consumer advocacy group, said regulators are focusing too closely on the "CEO drama" rather than protecting ratepayers from cost overruns at the nuclear plants.

"There's just a lot of broken trust, all kinds of problems. The North Carolina commission needs to refocus on what its duty is," Warren said. "Duke has no easy way out of Crystal River without a lot of pain."

Progress and Duke struck a deal in August that allows Progress Energy Florida to pass along the costs of replacing the plant's output through 2016 -- so long as repairs start by the year's end. If the company starts repairing the plant later, it will need to refund some of the replacement power costs (Greenwire, Aug. 3).

Duke officials said yesterday they are still gathering information about the Crystal River Unit 3 reactor and that it could take "months, not years" to determine just how costly the repairs would be. The companies are expected to issue two reports in the coming months about how to repair the plant and the risks involved in doing so.

But Florida regulators and consumer advocates are concerned about what percentage Nuclear Electric Insurance Ltd., Crystal River's insurer, will pay for the cost to repair the broken shield building.

Progress officials said yesterday NEIL has paid about $312 million to repair the plant but is no longer voluntarily paying any claims on the plant. Duke is expected to enter into nonbinding mediation with NEIL later this year, and Rogers said the companies could enter into "tough" negotiations if an agreement is not reached.

Rogers also said the mergers would bring far-reaching benefits to Florida customers but acknowledged ratepayers would be on the hook for potentially millions of dollars if the companies decide to repair the Crystal River plant without securing payments from NEIL.

"If NEIL makes what I believe is an unlikely decision to pay nothing ... it would be my belief that the costs of the repair would be borne by the customers," Rogers said. "But again, the important point is that we'll have to make a decision that we'll share with you."