Doubts dampen S.C.’s nuclear future

rburris@thestate.comAugust 19, 2013 

The hallmark of the future of nuclear power right now is uncertainty.

Utilities largely have backed off any rush to forge ahead in constructing the next generation of expensive, new nuclear reactor plants — even though they seemed plausible just a few years ago.

Santee Cooper, the state-owned utility in Moncks Corner, continues to try to divest itself of some portion of its 45 percent stake in two new reactors under construction at the V.C. Summer Nuclear Station in Jenkinsville, a $10 billion project.

SCE&G, the state’s largest utility and principal owner of the Summer plant, maintains the 55 percent controlling interest.

Santee Cooper has been seeking a buyer for its stake in the plant for three to four years, without success. Talks continue with one suitor, Charlotte energy giant Duke Energy.

The doubts are hard to miss.

A report from Georgia utility regulators this month said Georgia Power Co.’s plan for two nuclear reactors at Plant Vogtle near Augusta wouldn’t make economic sense if work started today. Cheap natural gas, a recession-tinged U.S. economy and inevitable construction cost overruns on the $14 billion project would put the Georgia plant out of reach, the report concluded.

But construction on the long-planned project started in March.

“Timing is everything,” said Steve Byrne, SCE&G chief operating officer. “We got our projects approved relatively early, as did Southern Co. (Georgia Power Co.’s parent company).”

Now the Summer plant is below original cost projections, SCE&G said.

But in June, SCE&G said both units at Summer would be delayed. The Unit 2 reactor, which was supposed to go online in March 2017, will now be delayed until late 2017 or the first quarter of 2018.The Unit 3 reactor originally was supposed to be in service by the end of 2018, but will be delayed similarly to the Unit 2 reactor, the utility said.

The delays could cost more than $200 million, SCE&G said.

While Santee Cooper has been in negotiations with several utilities about buying its stake in the V.C. Summer plant, it remains in negotiation now only with Duke.

Duke, which became the nation’s largest utility after acquiring Raleigh-based Progress Energy, has had issues with moving ahead with some of its nuclear plans.

The company sought construction and operating licenses to build two new reactor units at the Lee Nuclear Station in Gaffney. But three weeks ago, the Nuclear Regulatory Commission, which oversees commercial nuclear power production in the United States, delayed hearings on plans to build the units at Lee until 2016.

Duke’s plans to change the location of Lee’s two planned reactors and federal budget constraints caused the NRC delay, the company said.

Nuclear critics think Duke should strike a deal with Santee Cooper instead of building the reactors at Lee.

Santee Cooper didn’t have much to say about the possibility of a sale to Duke during a recent tour of the V.C. Summer plant in Fairfield County.

“At this point, I can only reiterate that negotiations continue,” said Nicole Aiello, a Santee Cooper spokeswoman.

Duke has said it remains in talks with Santee Cooper but is not ending hopes for expansion at its Lee plant in Gaffney.

“The delay to the Lee (construction and operating licenses) has no impact on our ongoing discussions with Santee Cooper related to V.C. Summer,” said Ryan Mosier, Duke Energy’s South Carolina spokesman. “We remain engaged in conversations with Santee Cooper regarding the option to purchase up to 10 percent of the V.C. Summer expansion that balances the interests of our customers, our communities and the company.”

SCE&G deflected concerns about Santee Cooper’s decision to bail out of part of its ownership at V.C. Summer.

“I’m not sure how zealous Santee is going to be about pursuing that sale, but they’re still in active negotiations with at least one partner,” Byrne said, referring to Duke.

But it may be Duke Energy that has the least to be zealous about in forging a deal with Santee Cooper, according to an independent nuclear expert in Washington.

The Department of Energy offered $8.3 billion in loan guarantees to Georgia Power Co. if the project fails, but that deal has not been finalized and negotiations between the parties continue.

There is no federal loan guarantee regarding SCE&G's plant construction at the V.C. Summer plant in South Carolina.

“There’s talk on Capitol Hill of providing more money for DOE to make additional loan guarantees. If so, Duke might be better off waiting for its Lee station,” said Dave Lochbaum, nuclear safety project director. “If that talk leads to nothing, the 45 percent share in Summer becomes more attractive. Duke would love to know whether more loan guarantee money will be available, because it significantly affects financing for Lee.”

The bottom line is, Duke needs to know how much power it needs, Lochbaum said — a variable it doesn’t exactly know.

“When Santee Cooper does not need power due to declining needs, Duke — having acquired Progress Energy last year — must make a strong case for needing more power before investing that much more money,” Lochbaum said.

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