As filed with the Securities and Exchange Commission on November 22, 1996
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):
November 21, 1996
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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.
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
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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 Progress issued a news release dated November 21, 1996
announcing approval of the spin-off of Echelon International Corporation, its
lending, leasing and real estate company, to shareholders. A copy of the news
release is being filed herewith as Exhibit 99.(a). Florida Progress also issued
an investor news release dated November 22, 1996 updating Florida Power's
Crystal River Nuclear Plant outage. A copy of the news release is being filed
herewith as Exhibit 99.(b).
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 Progress Corporation News Release dated November
21, 1996 announcing the approval of the spin-off of
Echelon International to shareholders.
99.(b) Florida Progress Corporation News Release dated November
22, 1996 updating Florida Power's Crystal River Nuclear
Plant outage.
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SIGNATURE
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/ James V. Smallwood
By:____________________________
James V. Smallwood
Vice President and Treasurer
Date: November 21, 1996
<PAGE>
EXHIBIT INDEX
Exhibit No. Description of Exhibit
99.(a) Florida Progress Corporation News Release dated November
21, 1996 announcing the approval of the spin-off of
Echelon International to shareholders.
99.(b) Florida Progress Corporation News Release dated November
22, 1996 updating Florida Power's Crystal River Nuclear
Plant outage.
EXHIBIT 99.(a)
Florida Progress Corporation
News Release
Corporate Relations Department, St. Petersburg, Florida
Media Contact:
Karen Raihill -- (813) 866-5023
Florida Progress Approves Spin-off of
Echelon International to Shareholders
ST. PETERSBURG, Fla. (November 21, 1996) -- Florida Progress Corporation (NYSE:
FPC), approved today the previously announced spin-off of Echelon International
Corporation (NYSE: EIN), its lending, leasing and real estate company, to
shareholders. Each Florida Progress shareholder of record as of December 5, 1996
will receive one share of Echelon International for every 15 shares of Florida
Progress stock and a check for any remaining fractional share amount. Echelon
International stock certificates will be mailed to shareholders on or about
December 18.
In July, Florida Progress announced its decision to spin-off Echelon
International to its shareholders through a tax-free stock dividend. The
spin-off allows Florida Progress to focus its attention on its core utility and
coal and transportation businesses while launching Echelon International as a
well capitalized business with a management team dedicated to seeking growth
opportunities to maximize the value of its assets for shareholders.
An Information Statement describing the spin-off and the business and financial
condition of Echelon International will be mailed to all Florida Progress
shareholders in the next couple of weeks.
Florida Progress is a Fortune 500 diversified utility holding company with
assets of $5.6 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 service and life
insurance.
###
EXHIBIT 99.(b)
Florida Progress Corporation
Investor News
Anayst Contact:
Mark Myers, Manager, Investor Relations (813) 866-4245
Florida Power Corporation's Crystal River Nuclear Plant Update
ST. PETERSBURG, Florida, November 22, 1996 -- In October, Florida Power
Corporation completed repairs to its Crystal River Nuclear plant resulting from
an oil pressure problem with its new turbine. Florida Power decided to
voluntarily keep the plant down to address several design basis issues and has
completed its review of the items necessary to restart the nuclear plant. Last
week the Nuclear Regulatory Commission (NRC) staff established a special panel
to provide oversight to Florida Power in restarting its nuclear plant. The panel
is chaired by Johns Jaudon, Deputy Director of Region II Division of Reactor
Safety.
The panel held its first organizational meeting on November 13, and has begun to
develop a checklist of all open issues at the Crystal River Nuclear plant. Over
the next few weeks, the panel will meet with Florida Power to determine which
items must be completed prior to restarting the plant.
Florida Power's current restart plan calls for the nuclear plant to return to
service on February 28, 1997. However, establishing this NRC oversight panel
could delay Florida Power's expected schedule for restarting the nuclear plant.
It is likely to be at least the middle of December before the NRC panel has
completed its assessment and Florida Power is able to determine the impact, if
any, to its restart schedule.
Financial Impact from the Nuclear Plant Outage
As previously reported, nuclear O&M costs will be about $15 million higher than
targeted for 1996. And management expects 1997 spending to also be at the higher
level. Depending on the corrective action, capital spending in 1997 may
increase, but it is not expected to be material to Florida Power's capital
budget. From a financial viewpoint, Florida Power does not expect the problems
at the nuclear plant to adversely impact its earnings in 1996 or 1997.
On November 15, a research report was issued by Merrill Lynch about Florida
Power's nuclear plant. The management of Florida Progress does not agree with
Merrill Lynch's conclusion that the problems at the nuclear plant could lead to
a change in dividend policy or dividend growth.
-- more --
Florida Progress has always taken a long-term view in setting its dividend
policy. When the dividend payout was 93% in 1992, the company didn't take a
short-term view of cutting its dividend. Based on the "Street's" expectations
for 1996, Florida Progress' dividend payout would be 79% at the end of the year.
Update on Management's Corrective Action Plan
During the last few months, several assessments have been conducted on the
nuclear plant by Florida Power, NRC staff and outside teams of experienced
nuclear industry professionals. Florida Power has developed an action plan to
incorporate the recommendations from these assessments.
Schedule 1 provides an update on the accomplishments that have been made to
date. While the corrective action plan will remain an ongoing effort, the
regional NRC staff have acknowledged Florida Power's progress in the areas of
management oversight, regulatory sensitivity and operations' performance.
Florida Power's senior management is committed to continuing to improve the
performance in each area and intends to improve the overall performance trend of
its nuclear plant.
Florida Progress (NYSE:FPC) is a Fortune 500 diversified utility holding company
with assets of $5.8 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
Through regular meetings with the NRC staff, Florida Power has reported the
following accomplishments in improving plant performance:
Management Oversight
o Renewed Florida Power's commitment to nuclear safety.
o Voluntarily kept the plant down in October in a maintenance outage to
correct design basis issues.
o Senior nuclear management has been candid in critically assessing its
problems.
o Florida Power's president has been actively involved in NRC and INPO
meetings -- with a commitment that the problems at the nuclear plant
will be corrected.
o The independent off-site safety review committee has been revamped.
o Hired a new quality assessment director and a new manager of quality
audits. The quality assessment department is now focused on broader
issues.
o Created a new nuclear safety assessment team.
Engineering Performance
o All key management positions have been changed.
o Actively recruiting for a new director of engineering.
o Hired 8 new engineers on staff and retained an engineering consultant
to provide another 20-25 engineers on site for at least the next year.
o Instituted a rigorous 50.59 review of past modifications to the plant's
safety systems.
o Improved training for 50.59 review for appropriate plant personnel.
<PAGE>
Design Basis Issues
o Identified eight design basis issues and developed an action plan to
correct seven of the issues during the current maintenance outage
(Schedule 2.)
o Sampling past modifications to determine if other design basis issues
can be found.
o Established a program to conduct safety system functional inspections
each year beginning in 1997.
Regulatory Sensitivity
o Changed the accountability and responsibility for licensing actions to
line management from the staff licensing group. The plant's licensing
staff is now in the role of facilitator with the NRC.
o Established an enhanced training program for achieving and maintaining
regulatory compliance.
o Increased and improved the regular communications process with the NRC.
Operating Performance
o Key management positions have been changed.
o Working to improve operations' ability to support other groups through
the addition of more resources.
o Established an enhanced training program that encourages
self-disclosure of problems, self-assessments, conservative decision
making and the importance of increasing margins of safety.
<PAGE>
Schedule 2
Florida Power's Crystal River Nuclear Plant
Design Margin Improvement Scope of Work
Eight design basis issues have been identified during this maintenance outage.
Presently, teams are working on evaluation, resolution and schedule.
1) High Pressure Injection (HPI) Pump recirculation to the Makeup Tank
Description: A scenario has been created in which there is a remote probability
that radioactive water could be released from the cooling system into an
auxiliary building.
Resolution: FPC is consulting with Framatome Technologies, Inc. to confirm
whether the scenario is valid and within the
plant design basis.
Schedule: This issue will be resolved prior to the start up from the current
outage.
2) HPI System Modifications
Description: The plant's HPI system currently meets all design and licensing
basis functional requirements. However, the configuration is not consistent with
designs at other Babcock & Wilcox plants.
Resolution: Modifications are being considered.
Schedule: Since the HPI system is fully capable of meeting its design function,
these modifications are not considered necessary to complete during the current
outage. However, FPC is developing the design packages and determining if
equipment can be procured in a timeframe to install in the current outage.
3) Low Pressure Injection (LPI) Pump Mission Time
Description: This system supplies water to the cooling system under low pressure
conditions. Under certain conditions, it may be necessary to run this pump at a
low flow rate for an extended period of time. FPC has performed testing on an
identical pump under these conditions.
Resolution: Extended testing of the pump has been completed with successful
results.
Schedule: This issue will be resolved before start up from the current outage.
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4) Reactor Building Spray Pump
Description: In order for the plant's circulation system to operate properly,
adequate water pressure must be maintained. It has been determined that the
safety margin for maintaining water pressure under worst case assumptions could
be improved.
Resolution: FPC plans to conduct factory testing and/or modify the pump impeller
to improve the margin between required and available net positive suction head
(NPSH).
Schedule: This issue will be resolved before start up from the current outage.
5) Emergency Feedwater System (EFS) Upgrades and Diesel Generator Load Impact
Description: The plant's EFS involves two pumps sharing a common suction line.
Under certain scenarios, it has been determined that the safety margin for both
pumps operating was too slim.
Resolution: Three possible modifications are being considered.
Schedule: This issue will be resolved before start up from the current outage.
6) Emergency Diesel Generator (EDG) Loading
Description: It has been determined, under a certain scenario, that the load
demand for one of the plant's two EDGs could exceed its 3,500 kw rating for 1.5
to 2 seconds.
Resolution: A combination of three efforts is being pursued to increase the
load capability of the EDG.
Schedule: This issue will be resolved before start up from the current outage.
7) Failure Modes and Effects of Loss of DC Power
Description: During the review and testing of the EDG (see # 6), it was
determined that it would be prudent to perform extensive analysis on the effects
of the loss of DC power at the plant.
Resolution: FPC plans to perform a DC power Failure Modes and Effects Analysis
(FMEA) which includes evaluations of
system interactions.
<PAGE>
Schedule: The FMEA review will be completed to the extent that FPC is satisfied
that we have identified any safety significant problems. Such problems will be
addressed prior to start up from the current outage.
8) Generic Letter 96-06
Description: This generic letter was issued by the Nuclear Regulatory Commission
to all nuclear operators in October 1996. It identifies several issues regarding
the effect of post-accident containment heatup on various structures within the
reactor building. CR-3 is susceptible to piping overpressurization. In addition,
FPC is evaluating water hammer and two-phase heat transfer problems.
Resolution: FPC is installing thermal overpressure protection devices on
containment penetrations affected by this overpressurization problem. Actions to
address the impact of the other two issues, if any, will be determined after the
review is completed.
Schedule: The overpressure protection devices will be installed prior to start
up form the current outage. Actions to address the impact of the other two
issues, if needed, will be scheduled according to the safety significance of the
findings.
