Financial Impact of Nuclear Power Plants: Firstenergy and Davis-Besse

Abstract

In March 2002, during a scheduled refueling outage, workers at FirstEnergy's Davis-Besse nuclear power plant found a football-sized hole in the reactor head caused by boric acid corrosion. Redundant shielding prevented any radiation leakage, but FirstEnergy projected the outage would last two to three months and cost from $15 million to $30 million. Instead, the outage lasted 26 months and cost $588.9 million. Students will learn the financial impact of the event, how investors reacted, and lessons in financial transparency.

Excerpt

UVA-C-2232

April 6, 2009

Financial Impact of U.S. Nuclear Power Plants:

FirstEnergy and Davis-Besse

On February 16, 2002, the Davis-Besse plant began a scheduled refueling outage. The plant was originally scheduled to return to service by March 31, 2002. During the outage, corrosion caused by boric acid deposits was found on the reactor vessel head near some of the control-rod-drive-mechanism penetration nozzles.

The U.S. Nuclear Regulatory Commission (NRC) issued a confirmatory action letter stating the plant restart would be subject to prior NRC approval. The NRC also established an Inspection Manual Chapter 0350 Oversight Panel to ensure close NRC oversight of corrective actions.

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Keywords: Finance, nuclear power, financial transparency, ethics in accounting