SCANA seeks $2 billion in tax breaks for abandoning failed nukes

SCANA will stop maintaining its V.C. Summer nuclear construction site by year’s end as the utility tries to collect $2 billion in tax breaks.

Company officials say their push to abandon the site and surrender its much-coveted federal license will help customers by defraying the costs of the failed nuclear project. But the company’s moves also are significant because they could determine how easy – or hard – it might be for another utility to one day complete the project.

Failing to maintain equipment would make cranking the project up more difficult in the future. Federal nuclear licenses also are hard to obtain, taking years to secure for any utility that might be interested in completing the two reactors.

Many critics doubt the project ever will be completed, noting public statements of disinterest in the botched V.C. Summer expansion by other major utilities, including Charlotte-based Duke Energy.

SCE&G’s plans, revealed Thursday, provide the most concrete evidence to date of how serious the utility is about never completing two new V.C. Summer reactors. SCANA laid out its plans during its first meeting with the S.C Public Service Commission since Aug. 1, the day after the company abandoned the V.C. Summer project.

“Site preservation is not in the best interest of our customers,” outgoing chief operating officer Steve Byrne said. “The abandonment does bring with it a tax deduction that represents a large benefit to our customers.”

Winding down the project would help make the case to the Internal Revenue Service that SCANA deserves the tax break, officials said. The utility will notify the Nuclear Regulatory Commission by Dec. 15 “that we’re going to terminate that license,” general manager Todd Johnson said .

SCANA’s plans sparked questions from PSC members, as well as interest groups. Many wanted to know whether the utility actually would get the $2 billion tax break it says is so important.

“There is not enough clarity about whether or not the tax advantage will benefit the consumers,” said Coretta Bedsole, associate director for the S.C. AARP. “It seems like (SCANA subsidiary) SCE&G is taking a gamble on what the IRS may or may not approve.”

PSC commissioners questioned how SCE&G’s decision to abandon the site could affect the project’s junior partner, the state-owned Santee Cooper utility. Santee Cooper also quit the project July 31 but says it wants to maintain the site and equipment for possible future use.

“How do you go about reaching an abandonment decision if one party is moving in a different direction?” commissioner O’Neal Hamilton asked.

SCE&G officials said Santee Cooper’s interests are not their problem. Getting the tax break would pay for about 40 percent of the almost $5 billion that SCE&G says it has spent on the failed nuclear project.

“We are looking out for our customers,” said James Swann, the utility’s vice president and controller. “It doesn’t help our story” if Santee Cooper tries to preserve the site when SCE&G wants to abandon it.

“It’s hard to reconcile the idea of preserving the site and the idea of us claiming the abandonment tax break,” Swann said.

Together, SCANA and Santee Cooper spent about $9 billion and a decade on the construction effort before pulling the plug. Both utilities said they could not afford to continue the effort after the project’s chief contractor, Westinghouse, filed for bankruptcy.

That decision left more than 5,000 people out of work and customers angry they had been billed for a project that won’t be completed.

SCANA has charged its customers $1.7 billion and is considering whether to raise its rates again to pay for other nuclear-related costs.

SCANA and Santee Cooper, which owns 45 percent of the project, have been involved in high-level meetings recently over what to do with tons of specially constructed parts and equipment that today are sitting at the V.C. Summer site in Fairfield County.

Last month, the state Office of Regulatory Staff criticized SCE&G, saying the SCANA subsidiary effectively had left the material exposed on the site to rot.

The company disputed that Thursday. It has maintained some equipment and begun breaking down other equipment for possible sale, officials said.

Still, surrendering the project’s nuclear license, as SCANA plans to do, is another sign that the project is doomed.

Nuclear licenses take years to obtain.

But Roger Hannah, a spokesman for the Nuclear Regulatory Commission, said SCANA could transfer the federal permit to another utility or company interested in finishing the project. That would require NRC review and public hearings.

Santee Cooper spokeswoman Mollie Gore and Leighton Lord, the utility’s board chairman, said that utility is involved in a variety of discussions about what to do with the site. A key question is whether preserving it would be too expensive. Some estimates by Santee Cooper have placed that cost at $15 million a year.

“We want to preserve the hard assets on the site so that if anybody comes along and says, ‘We want to build these things,’ it can be done,” Lord said.

“Every issue related to preserving this asset is being discussed,” Lord said. “The license is one of those issues.”

This story was originally published November 9, 2017 at 2:19 PM with the headline "SCANA seeks $2 billion in tax breaks for abandoning failed nukes."