As filed with the Securities and Exchange Commission on January 16, 1997
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
_____________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
January 7, 1997
<TABLE>
<CAPTION>
Exact name of Registrant as specified
Commission in its charter, address of principal State of I.R.S. Employer
File No. executive offices, telephone number Incorporation Identification No.
<S> <C> <C> <C>
1-8349 FLORIDA PROGRESS CORPORATION Florida 59-2147112
One Progress Plaza
St. Petersburg, Florida 33701
Telephone (813) 824-6400
1-3274 FLORIDA POWER CORPORATION Florida 59-0247770
3201 34th Street South
St. Petersburg, Florida 33711
Telephone (813) 866-5151
</TABLE>
The address of neither registrant has changed since the last report.
This combined Form 8-K represents separate filings by Florida Progress
Corporation and Florida Power Corporation. Florida Power makes no
representations as to the information relating to Florida Progress'
diversified operations.<PAGE>
Item 5. Other Events
In light of ongoing securities offerings by Florida Progress Corporation
("Florida Progress") and its subsidiaries, including Florida Power Corporation
("Florida Power") and Progress Capital Holdings, Inc., the following
information is being presented pending distribution of the combined Florida
Progress and Florida Power Annual Report on Form 10-K for the year ended
December 31, 1996:
Florida Power issued a news release dated January 7, 1997 announcing the
replacements in top nuclear positions. A copy of the news release is being
filed herewith as Exhibit 99.(a). Florida Progress issued an investor news
release dated January 14, 1997 relating to the Crystal River 3 Nuclear Power
Plant. Florida Power issued a news release dated January 14, 1997 regarding the
company's request to recover higher fuel costs. A copy of each news release is
being filed herewith as Exhibit 99.(b) and 99.(c), respectively.
Item 7. Financial Statements and Exhibits
(c) Exhibits:
Exhibit Number (by
reference to Item 601
of Regulation S-K) Description of Exhibit
99.(a) Florida Power Corporation News Release dated January 7,
1997 announcing the replacements in top nuclear
positions.
99.(b) Florida Progress Corporation Investor News Release dated
January 14, 1997 regarding the Crystal River 3 Nuclear
Power plant.
99.(c) Florida Power Corporation News Release dated January 14,
1997 regarding recovery of higher fuel costs.<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
each registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FLORIDA PROGRESS CORPORATION
FLORIDA POWER CORPORATION
/s/ Jeffrey R. Heinicka
By:____________________________
Jeffrey R. Heinicka
Senior Vice President and
Chief Financial Officer
of each Registrant
Date: January 14, 1997
<PAGE>
EXHIBIT INDEX
Exhibit No. Description of Exhibit
99.(a) Florida Power Corporation News Release dated January 7, 1997
announcing the replacements in top nuclear positions.
99.(b) Florida Progress Corporation Investor News Release dated
January 14, 1997 regarding the Crystal River 3 Nuclear Power
plant.
99.(c) Florida Power Corporation News Release dated January 14, 1997
regarding recovery of higher fuel costs.
EXHIBIT 99.(a)
[GRAPHIC OMITTED]
Florida Power Corporation
News Release
Corporate Relations Department, St. Petersburg, Florida
Media Contact:
Melodye Hendrix
(813)866-4282
Florida Power Corporation Announces Replacements In Top Nuclear Positions
St. Petersburg, FL (January 7, 1997)-- Two individuals have been selected
for key positions at Florida Power Corporations Crystal River 3 nuclear power
plant. The announcement was made today by President Joe Richardson.
Roy A. Anderson, currently a senior vice president with Carolina Power &
Light Company, will join Florida Power as a senior vice president later this
month and also will become chief nuclear officer effective March 3. He will
replace Pat Beard, who will then report to the president as senior vice
president handling special nuclear projects until he retires April 1.
John P. Cowan, currently a vice president with Carolina Power & Light, will
serve as site vice president at Crystal River 3. He will succeed Gary Boldt, who
has announced his resignation effective January 31.
Anderson has 26 years of experience in the electric utility business
including both nuclear and non-nuclear. Prior to working at Carolina Power &
Light, he served as plant manager during the dramatic improvement to Boston
Edison Company's Pilgrim Nuclear Power Station in the late 1980s. In 1993, he
accepted the challenge to improve Carolina Power & Lights Brunswick Nuclear
Plant, where he was faced with a plant in regulatory shut down, low Systematic
Assessment of Licensee Performance (SALP) scores, and close Nuclear Regulatory
Commission (NRC) scrutiny. In the ensuing two years, the Brunswick Nuclear Plant
was transformed into a top performing nuclear generating station.
Anderson holds a bachelor of science degree in marine and nuclear
engineering from the State University of New York and a master of business
administration degree in business operations research from the Rensselear
Polytechnic Institute.
Cowan has recently been serving on behalf of Carolina Power & Light at the
Northeast Utilities Millstone Plants as restart officer because of his expertise
in nuclear plant improvement. While at the Brunswick Nuclear Plant, Cowan moved
up through
-continued-
<PAGE>
Florida Power Corporation
page 2.
several positions including director of site operations when he was responsible
for improvements in the areas of SALP scores and Institute of Nuclear Power
Operations (INPO) performance. Prior to working at Carolina Power & Light, Cowan
served with INPO.
Cowan received a bachelors degree in nuclear engineering from the
University of Wisconsin, a masters degree in business management from the
Rensselear Polytechnic Institute and a juris doctorate degree from Georgia State
University.
"I feel very fortunate to have Roy and John joining the Crystal River 3
management team," said Richardson. "They are well respected for their expertise
and leadership and I am confident that they can lead the plant to achieving top
performance."
Crystal River 3 is an 860-megawatt nuclear power plant located at Florida
Powers Crystal River Energy Complex near the Gulf of Mexico in Citrus County.
The plant has been in operation since 1977 and is Florida Powers only nuclear
unit.
The plant was taken off line last September 2 to repair a cracked
lubricating-oil pipe leading to the main turbine generator. While the repairs
were made, Florida Power officials initiated an extended maintenance outage to
analyze and resolve technical issues associated with plant equipment operating
margins. Regular technical review meetings, involving Florida Power and the NRC,
are being conducted to provide an open forum for discussion of issues and their
resolutions. Close communication with the NRC will ensure a timely return of the
plant to service once the issues are resolved.
Florida Power Corporation is the principal subsidiary of St.
Petersburg-based Florida Progress Corporation (NYSE: FPC) and serves 1.3 million
customers in central and northern Florida.
-30-
EXHIBIT 99.(b)
[GRAPHIC OMITTED]
Florida Progress Corporation
Investor News
Analyst Contacts:
Mark A. Myers (813) 866-4245
Greg Beuris (813) 866-4442
Florida Power Corporation's Crystal River Nuclear Plant Update
ST. PETERSBURG, Florida, January 14, 1997 -- Florida Power Corporation's
Crystal River Nuclear plant management met with the staff of the Nuclear
Regulatory Commission (NRC) on January 9 to discuss the status of the
restart plan with the special NRC panel and to review the company's
progress on phase two of its Management Corrective Action Plan (MCAP).
CRITICAL RESTART ISSUES
On September 2, 1996, Florida Power shut down the nuclear plant because of
an oil pressure problem with its new turbine. When repairs for the oil
pressure problem were completed in October 1996, Florida Power decided to
keep the plant down to address several design basis issues.
The two primary design basis issues related to the safety margins of the
plant's emergency feedwater pump system and an emergency diesel generator
under hypothetical accident conditions. Florida Power's nuclear engineers
determined that safety margins under a certain scenario were inadequate for
the two feedwater pumps that share a common water suction line and that the
load demand for one of the plant's two emergency diesel generators could
exceed its 3,500 kw rating for 1.5 to 2 seconds.
In October 1996, Florida Power's nuclear management determined that the
critical time issue to restarting the plant was correcting the emergency
feedwater system problem. The corrective action is to modify the system by
installing special equipment called cavitating venturis. The action plan
for this matter is proceeding along as scheduled.
Upon further review and analysis of the diesel generator loading issue,
Florida Power's nuclear engineers determined that resolution of this
problem would extend the outage beyond the original restart date of
February 28, 1997. It was also determined that a modification made during
its last refueling outage which related to the diesel generator loading
problem, should have been reviewed by the NRC. A pre-enforcement conference
is scheduled for January 24, 1997, to address this violation.
Florida Power is assessing several options which address the diesel
generator loading issue.
o Option 1 - Significantly upgrade and modify the diesel generator to
achieve a higher capacity of 4,150 kw.
-- more --
<PAGE>
o Option 2 - Upgrade the diesel generator to increase the loading capability
by 150 kw during the current outage and make the additional modifications
in Option 1 or Option 3 during the plant's next refueling outage in 1999.
o Option 3 - Reduce the loading on the existing diesel generator by
designing and installing a separate, diesel-driven emergency feedwater
pump.
Florida Power will present these options along with its restart plan to the
NRC by the end of February. The company intends to concurrently pursue all
three options.
In option one, Florida Power will ask the manufacturer of the diesel
generator to develop and certify modifications to the generator that would
increase the maximum loading to a rating of 4,150 kw. Preliminary
discussions with the manufacturer indicate a high degree of confidence that
the rating can be successfully increased due to their experience testing
similar diesel engines. By the end of April 1997, the manufacturer expects
to complete all of the necessary tests to validate this approach. The
company expects that this option can be completed during the fourth quarter
of 1997.
The second option involves modifying the diesel generator to increase its
loading capacity by 150 kw thus improving the safety margin related to its
design basis scenario requirements. Completion of this work would allow the
unit to be returned to service by the end of the second quarter 1997. Then
Florida Power would complete the more extensive modifications needed under
options one or three during its next refueling outage in 1999.
Florida Power's nuclear plant management is confident that its plan to have
the generator upgraded will be successful. However, in the event the
manufacturer is unable to certify the higher rating, the third option is
being evaluated. This alternative calls for designing, building and
installing a diesel-driven emergency feedwater pump. Adding this separate
pump will reduce the load to the problem diesel generator. Due to the lead
times to complete the activities in this option, the nuclear plant would
not restart before the middle of 1998.
RESTARTING THE NUCLEAR PLANT
Florida Power plans to file its formal restart plan with the NRC by the end
of February. The plan will include restart items identified by Florida
Power and the NRC. Florida Power also expects to file several license
amendments to address certain restart issues. Before a final restart date
can be set, the NRC must review Florida Power's list of restart issues and
concur with proposed actions to resolve those issues. Resolution of the
diesel generator loading problem is one of two critical issues which impact
the restart date.
The other critical issue is "the extent of condition". This means that
Florida Power must satisfy the restart panel that all of our safety systems
are operating within their design basis, notwithstanding modifications made
to the plant since going on line.
--more--
<PAGE>
Like all nuclear plants, Florida Power has made numerous modifications to
its safety systems over the years to improve the plant's reliability and
safety. The company's current plan is to review an adequate sample of prior
modifications to determine if there are other design basis issues that must
be addressed prior to restart.
FINANCIAL IMPACT FROM THE NUCLEAR PLANT OUTAGE
Nuclear O&M costs could be about $10 million to $15 million higher in 1997
than 1996. From a financial viewpoint, Florida Power does not expect the
nuclear plant outage to adversely impact earnings or lead to a change in
dividend policy or dividend growth.
UPDATE ON MANAGEMENT'S CORRECTIVE ACTION PLAN
Florida Power's MCAP plan, which was initially developed in 1995, was in
response to several assessments made by Florida Power, NRC staff and
outside teams of experienced nuclear professionals. Last week's update to
the NRC staff covered management oversight, engineering, operations and
regulatory compliance. The NRC staff noted the significant effort being
made by Florida Power to improve these areas. A summary of the key
achievements is included on Schedule 1.
COMPANY CONFERENCE CALL
Florida Progress plans to conduct a conference call with the financial
community at 10 am EST on Wednesday, January 15 to further discuss the
issues pertaining to the nuclear plant. The access number is (719)448-2000.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act
of 1995: this report contains forward looking statements, including
statements regarding the timing of expected restart of the nuclear plant,
and the impact of the shutdown of the nuclear plant on earnings and
dividend policy. These statements involve risks and uncertainties that
could cause actual results or outcomes to differ materially from those
expected. Pertinent risk factors include actions by the NRC restart panel
and the Florida Public Service Commission, changes from expectations in
actual engineering or other activities at the nuclear plant, and other
risks described in the Company's Securities and Exchange Commission
filings.
Florida Progress (NYSE:FPC) is a Fortune 500 diversified utility holding
company with assets of $5.3 billion. Its principal subsidiary is Florida
Power, the state's second-largest electric utility with about 1.3 million
customers. Diversified operations include coal mining, marine operations,
rail services and life insurance.
####
<PAGE>
Schedule 1
Florida Power's Crystal River Nuclear Plant
Update on Management's Corrective Action Plan
Management Oversight
o Improvements made in self-assessment processes.
o Several management changes have been made mostly with new hires from
outside Florida Power to bring new ideas and objectivity.
o New corrective action plan developed with assistance from Failure
Prevention International Inc., a widely respected root cause
analysis and accident prevention consulting firm.
Engineering Performance
o Hired a new director of engineering. Also hired two former nuclear
plant senior executives to strengthen management oversight of the
off-site safety review committee. All three come from other nuclear
facilities and bring extensive nuclear engineering experience.
o Continued improving the process of applying 10 CFR 50.59 reviews.
These reviews are required when changes, tests or experiments are
performed at the plant.
o Establishing a special group to review all 10 CFR 50.59 reports to
ensure proper compliance.
Operating Performance
o Made further changes to training programs to produce more highly
qualified plant operators.
o Documented effectiveness of efforts to improve self-disclosure of
problems. Evidence shows improvement in the areas of self-assessment
and self-disclosure.
Regulatory Compliance
o Conducted an extensive self-assessment of our licensing organization
and evaluated organizational changes to further improve the
regulatory compliance throughout the plant.
o Continue to improve the organization's understanding of regulatory
requirements. Seventy-five percent of all managers have attended
training classes on the regulatory process, with the remaining
expected to attend in 1997.
o New 10 CFR 50.59 compliance procedure has been developed for the
site support department.
EXHIBIT 99.(c)
[GRAPHIC OMITTED]
Florida Power Corporation
News Release
Corporate Relations Department, St. Petersburg, Florida
Contact: Karen Raihill (813) 866-5023
FLORIDA POWER CORPORATION ASKS TO RECOVER
HIGHER FUEL COSTS
St. Petersburg, FL (January 14, 1997) -- Florida Power Corporation is
seeking an increase in the fuel expense portion of customer bills, mainly due to
an extended maintenance outage at the Crystal River nuclear plant.
The average 1,000-kilowatt-hour bill for residential customers would
increase from $83.39 to $88.65, effective April 1. This increase is subject to
approval by the Florida Public Service Commission.
This additional fuel charge represents the fuel cost of replacement
power to make up for the nuclear plant being out of service. It also reflects
higher oil and natural gas prices.
Fuel expense charges are a direct "pass-through" item on customer
bills, which means Florida Power does not earn any profit or mark-up on these
amounts.
Florida Power's replacement power fuel costs are approximately $10
million a month. This includes the cost of running more expensive generation
such as the company's peaker power plants that operate on distillate oil, and
purchasing power from other utilities.
"We are very sensitive, of course, to increases for our customers. To
lessen the impact, we are asking that these fuel costs be spread out over a 12-
month period instead of the customary six," said Joe Richardson, president and
chief operating officer of Florida Power.
"We are working diligently to return the nuclear plant to service. The
impact to bills is higher than we would like. However, we believe the steps we
are taking will reduce costs to our customers in the long term by ensuring the
plant resumes its strong performance record," Richardson said.
(more)
<PAGE>
During the nuclear outage, Florida Power will resolve design issues
aimed at improving plant equipment safety operating margins. The company is
holding regular technical review meetings between its nuclear restart team and
one created by the Nuclear Regulatory Commission.
The primary issue involves addressing electrical loading on one of the
plant's two emergency diesel generators. The generators would supply power to
the emergency core cooling system in the event there is a loss of off-site
electricity.
Company management is reviewing possible options to resolve the loading
issue. Under any of the alternatives, the company's nuclear engineers have
determined that resolving the generator issue will extend the outage beyond the
original restart date of February 28.
The most probable option that has been identified involves upgrading
the diesel generator to increase its loading capacity and then having the
manufacturer of the diesel generator modify and rerate the generator's maximum
loading to approximately 4,100 KW from its current 3,500 KW rating.
If preliminary tests to be completed in April indicate the
modifications and a higher rating are achievable, the company would expect the
nuclear plant to restart during the fourth quarter of 1997.
Fuel costs are reviewed twice a year by the Public Service Commission.
These costs take into account actual figures for the previous six months, as
well as projected costs for the next six months. A "true-up" of these costs is
included in any change to the fuel charge. Changes take effect every six-month
period, starting on April 1 and October 1.
The Commission will hold fuel adjustment hearings on February 19-21 for
all of the state's investor-owned utilities.
Florida Power, the state's second-largest electric utility, is the
principal subsidiary of St. Petersburg-based Florida Progress Corporation
(NYSE:FPC) and serves 1.3 million customers in central and northern Florida.
###
