CRYSTAL RIVER -- Duke Energy announced early Tuesday it will permanently close the Crystal River nuclear plant that has been shut down since late 2009 after a botched effort to upgrade the facility.

It will become the first nuclear power plant to close in Florida and the entire southeastern United States.

The company said it is reviewing alternatives, including building a new natural gas plant, to replace the power produced by the nuclear facility. Duke’s four coal-fired plants will remain in service at the same Citrus County complex — on the Gulf Coast north of Tampa — where the nuclear plant, known as CR3, is located.

"We believe the decision to retire the nuclear plant is in the best overall interests of our customers, investors, the state of Florida and our company," said Jim Rogers, chairman, president and CEO of Duke Energy. "This has been an arduous process of modeling, engineering, analysis and evaluation over many months. The decision was very difficult, but it is the right choice."

"The Crystal River Nuclear Plant has been an important part of our generation fleet for three decades," said Alex Glenn, state president of Progress Energy Florida, a subsidiary of Duke Energy. "We are very sensitive to the impact on our employees at the plant and on the Citrus County economy.”

Tuesday’s decision to close the nuclear plant was the culmination of a series of events that began in 2009.

That year, Progress Energy Florida, now part of Duke, planned to replace two steam generators and do upgrades that would increase the plant’s generating capacity by 20 percent.

The work is relatively routine, having been performed successfully at dozens of plants across the country. But two things distinguished Progress’ handling of the work. Progress self-managed the steam generator replacement rather than hire one of the two companies all the other U.S. utilities used to oversee that work. The idea was to save money.

But more problems followed.

In fall of 2009, as workers began the project, they cracked the reactor’s 42-inch thick concrete containment building. They repaired the wall only to discover their efforts had cracked the wall again. The 36-year-old plant has been idle since.

"This is a problem that came about as a result of an effort to extend the life of the plant," said Charles Rehwinkel, deputy state public counsel, who represents consumers before the Public Service Commission.

Though other utilities had performed the work successfully, Rehwinkel said "it just wasn’t in the cards for this plant," Rehwinkel said. "It’s a very unusual case."

Replacing CR3 with a natural gas plant would be costly for customers. Florida Power & Light, the state’s largest utility, will open a new roughly 1,000 megawatt natural gas plant later this year at Cape Canaveral for about $1.2 billion.

"This is a stark reminder of some of the of the risks you face in nuclear generation and construction," Rehwinkel said. "Unfortunately for the customers, it’s a heavy price to pay. At least it could be."

Customers will benefit from Duke’s decision to delay the full dismantling of the plant for 40 to 60 years to allow its decommissioning fund to grow and cover the costs.

A 2008 study on the Crystal River nuclear plant estimated that decommissioning the reactor in 2013 would cost $936 million.

At the end of the third quarter of 2012, Duke’s Florida subsidiary, Progress Energy Florida, reported $621 million in its decommissioning fund.

The last nuclear plant to go through that process was the Maine Yankee plant in Wiscassett, Maine, that like CR3 was about a 900 megawatt plant. It took eight years to complete that process, which began in 1997.