Updated 5:15 p.m.
Two South Carolina utilities said Monday they are halting construction on an expansion of a nuclear plant about 30 miles north of Columbia. Now the question is who pays for the $9 billion dollars already spent.
Construction began five years ago on two new reactors at the V.C. Summer nuclear plant. It's a joint project by two big electricity producers, South Carolina Electric & Gas and state-owned Santee Cooper.
The project is behind schedule and over budget. And its future has been in doubt since March, when lead contractor Westinghouse filed for bankruptcy.
Now, the two utilities are pulling the plug.
On Monday, Santee-Cooper's board voted to stop construction, saying it would save customers 7 billion dollars. Santee-Cooper owns 45 percent of the project.
A short time later, South Carolina Electric & Gas said it will abandon the project, citing the combination of Westinghouse's bankruptcy and Santee-Cooper's decision.
"After Westinghouse’s bankruptcy and anticipated rejection of the fixed-price contract, the best case scenario shows this project would be several years late and 75 percent more than originally planned," Santee Cooper CEO Lonnie Carter said in a press release. “We simply cannot ask our customers to pay for a project that has become uneconomical. And even though suspending construction is the best option for them, we are disappointed that our contractor has failed to meet its obligations and put Santee Cooper and our customers in this situation.”
SCANA CEO Kevin Marsh said in a statement Monday morning: "Many factors outside our control have changed since inception of this project. Chief among them, the bankruptcy of our primary construction contractor, Westinghouse, eliminated the benefits of the fixed-price contract to our customers, investors, and other stakeholders. Ultimately, our project co-owner Santee Cooper’s decision to suspend construction made clear that proceeding on our own would not be economically feasible. Ceasing work on the project was our least desired option, but this is the right thing to do at this time."
Altogether, the utilities have spent about $9 billion so far. South Carolina Electric & Gas owns 55 percent, and hopes to recover at least some of those costs through rate increases, Marsh told analysts in a conference call Monday afternoon.
“We expect to continue to work with the office of regulatory staff and any other intervening staff to attempt to reach a fair and balanced resolution resolution to this matter,” Marsh said.
Environmental groups have opposed the project - and its costs. Tom Clements of Friends of the Earth says it already accounts for about 18 percent of the monthly bills for customers of South Carolina Electric & Gas.
“Our rates could essentially skyrocket now when the company tries to get the cost of abandoning the project put in the rate base,” he said.
Clements says his group will ask state regulators to reduce rates so consumers don't have to pay for the failed project.
SCE&G, a subsidiary of SCANA Corp., is scheduled to deliver an update to state regulators on Tuesday.
FAILED PROJECT
The reactors would have been among the first new nuclear reactors built in the U.S. in decades.
The utilities first sought approval for the expansion in 2008 and construction began in 2012. Santee Cooper said it has spent about $4.7 billion so far, and that halting the project would save ratepayers $7 billion.
SCANA has spent about $4.9 billion.
Both companies’ costs would be offset slightly by a settlement with the contractor. 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.
RELATED LINKS
July 31, 2017, SanteeCooper.com announcement, "Santee Cooper suspends construction of V.C. Summer Units 2 and 3"
July 31, 2017, SCANA.com, announcement, "South Carolina Electric & Gas Co. to Cease Construction And Will File Plan of Abandonment of the New Nuclear Project."
May 2, 2017, Reuters.com,"How two cutting edge U.S. nuclear projects bankrupted Westinghouse"
