A utility will brief South Carolina regulators Tuesday on its plans to end construction of two nuclear reactors that customers have already paid billions to build.
The state Public Service Commission will hear from executives with SCANA, the parent company of South Carolina Electric & Gas. Both SCE&G and state-owned Santee Cooper decided Monday to scuttle the project at V.C. Summer Nuclear Station north of Columbia. The hearing could supply answers on how that decision will affect customers.
Private utility SCE&G, which owns 55 percent of the project, must win state approval of its abandonment plans.
The project has been shrouded in doubt since Westinghouse, hired as primary contractor in 2008, filed for bankruptcy protection earlier this year.
The utilities have since determined costs to finish the project could top $20 billion. They have already jointly spent roughly $10 billion over a series of delays and cost overruns.
Under a timeline adopted in 2012, the first reactor was supposed to be operational earlier this year, and the second reactor was supposed to follow in May 2018. Instead, the project is roughly one-third complete. The latest analysis shows the project likely couldn’t be completed until 2024.
SCANA expects scrapping the project to cost $5 billion, which it hopes to recoup over decades, SCANA CEO Kevin Marsh told investors after the decision.
The reactors were set to be among the first built in the U.S. in decades. While the decision will save customers billions in additional costs, the utilities’ customers of the two utilities may get little to nothing refunded of the billions they’ve already paid for the now-abandoned project.
A 2007 state law allows electric utilities to collect money from customers to finance a project before it generates power. Construction now accounts for 18 percent of the electric bills of SCE&G’s residential customers. Santee Cooper has increased rates five times to pay for the escalating costs. But the Public Service Commission has no authority over the state-owned utility.
“I’m disappointed today not just for Santee Cooper and its customers but for our country and the industry as a whole,” Santee Cooper CEO Lonnie Carter said Monday. “If you really believe we need to reduce carbon, this was the way to do it.”
Santee Cooper’s board said the decision to end construction will save customers an estimated $7 billion.
Tom Clements of Friends of the Earth said his environmental group, which has questioned the project from the outset, will work to “get to the bottom line of how this happened, who’s responsible” and what that means for customers.
Gov. Henry McMaster called for legislators to hold hearings to get customers’ questions answered.
Under the approved Santee Cooper resolution, all work will end within six months. How quickly within that timeframe workers at the site will lose their jobs is uncertain.
About 5,000 people are employed at the site by contractors and subcontractors. SCE&G employs an additional 600 workers for the project, according to the utility.
The utilities announced last week that Westinghouse’s parent company, Toshiba Corp., agreed to jointly pay them $2.2 billion regardless of whether the reactors are ever completed.
Santee Cooper will use its $1 billion share from Toshiba – to be collected between October and 2022 – to lower customers’ future costs, Carter said. But it’s unclear if that will translate to lower bills. Rates are rising due to environmental projects, and the money could offset either those costs or debt, Carter said.
SCE&G will use the money to ensure customers see no increase in their bills for at least the next several years, Marsh said in the conference call with investors.
But another unknown is whether Toshiba will actually pay. In May, the Tokyo-based company projected a 1.01 trillion yen ($9.2 billion) loss for the fiscal year that ended in March.
Environmental groups want customers to be refunded at least some of the billions they’d paid upfront through rates that have increased yearly since 2009. A hearing on that request is set for October.
Whether the commission can order the utility to refund customers and how much are matters of debate. That could require proof the utility gave regulators faulty information.
Source: Associated Press