The future of an over-budget nuclear reactor project in South Carolina could be decided as soon as next week – and there are indications the $14 billion construction effort could be scaled back or abandoned.
State-owned Santee Cooper announced Friday that its board will meet in special session at 10 a.m. Monday in Columbia to discuss the company’s joint effort with SCE&G to build two reactors at the companies’ V.C. Summer plant near Jenkinsville. A notice Friday afternoon said the board will take action on the nuclear project.
SCE&G, an investor-owned utility, is scheduled to address the S.C. Public Service Commission on Tuesday about the nuclear project, which ran into trouble after chief contractor Westinghouse filed for bankruptcy this past spring.
In a joint news release this week, both companies painted a dark picture of the challenges they face in continuing the nuclear construction project, which is $2.5 billion to $3 billion over budget and several years behind schedule.
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Santee Cooper and SCE&G said the project will cost more than expected and take longer to finish – and that could influence their decision on whether to continue work. Both companies, notably Santee Cooper, will have more energy capacity than needed after the reactors are to be finished.
“Based on these considerations, the alternatives of completing both units or one unit are subject to significant challenges,’’ the utilities said in their news release. “The owners expect to announce their decisions soon.’’
Financial analysts, who provide advice to those interested in investing in SCE&G, were calling state offices and public interest groups Friday asking about the project’s future.
Santee Cooper spokeswoman Mollie Gore said the Santee Cooper board would vote on whether to go forward with the nuclear reactor project. She declined to release a resolution reflecting what agency staff is recommending. But Gore said the utility has completed an assessment of the project.
“This is something we have spent four months developing,’’ she said of the assessment. “We will be making a decision that is based on what we think is best for our customers.’’
Orangeburg Sen. Brad Hutto, a Democrat who serves on the state public utilities review committee, said the decision will be a tough one. The power companies have collectively spent about $9 billion on the reactors. The construction work is about one third complete.
“There is a plausible argument to be made either way, given the extent of the investment already made,’’ said Hutto, who said he had not been told how the Santee Cooper board might vote.
Sen. Paul Campbell, a Berkeley Republican and former Santee Cooper board member, said he hopes the utilities will move ahead with the reactors because the power will be needed one day.
Santee Cooper and SCE&G pushed for the plant expansion a decade ago, saying two more nuclear reactors would provide power they needed for the future. The companies have raised utility rates 14 times to help pay for the work, causing complaints about the increases. Now, records reviewed by The State newspaper show that demand for power has leveled off and both companies would have more capacity to produce energy than typically is needed.
SCE&G spokeswoman Rhonda O’Banion declined to say when SCANA’s governing board would meet again. SCANA is the parent corporation of SCE&G.
“We are committed to making a financially responsible decision for our customers and other stakeholders,”O’Banion said in an email Friday night. “At this time, we are not providing more details beyond what is in the news release we distributed yesterday. We expect to provide more information soon.”
Deciding the fate of the nuclear project as soon as possible is perhaps more important to SCE&G than state-owned Santee Cooper because of investor concerns. Options on the table are whether to press forward and build both reactors, build only one or walk away from the project.
Analysts calls Friday were the latest in a series of inquiries this year to the state Office of Regulatory Staff, said Dukes Scott, the agency’s director. His office is charged with advocating for the state’s consumers.
Friends of the Earth adviser Tom Clements, a project opponent who has tracked the issue closely, said analysts also had peppered him with questions Friday.
Some final resolution might be needed soon, Scott said.
“The market looks like its reacting to that press release,’’ Scott said of Thursday’s news release by SCE&G and Santee Cooper. “Uncertainty in the market is not good.’’
SCANA’s stock dropped to a 52-week low Friday after the company said Thursday the cost to complete both nuclear reactors could “materially exceed’’ a nearly $2.2 billion guarantee offered by Westinghouse’s parent corporation, Toshiba, according to a report by the Seeking Alpha website.
SCE&G and Santee Cooper announced Thursday that they would accept the guarantee to help defray costs at the nuclear project, but Santee Cooper chief executive Lonnie Carter said he was worried about whether Toshiba could make good on the money because it also has financial troubles.
SCANA’s stock dropped to $61.06 during trading Friday and closed at $61.29, a drop of 6.63 percent from Thursday’s close, according to Yahoofinance.com. O’Banion declined to discuss the drop in stock price.
Scott said he heard Friday from SCE&G, which was trying to determine what analysts were asking about. Scott said the utility did not tell him if it planned to walk away from the project or keep it going.