SCANA has proposed giving its failed nuclear construction site to Santee Cooper so the project can be preserved and one day finished, according to correspondence between the two utilities.
However, the state-owned utility privately has pushed back against accepting full ownership of the project.
Santee Cooper is wary that accepting full ownership would stick its customers with the full cost of maintaining two unfinished reactors at the Fairfield County site. It also objects to a part of SCANA’s proposal that would bar Santee Cooper from suing Cayce-based SCANA over the nuclear fiasco.
SCANA’s proposal, laid out in a Dec. 4 letter obtained by The State, comes just days before Friday’s deadline for SCANA to decide whether to surrender its federal license for the reactors. Giving up the license effectively would kill any chance the reactors ever would be finished.
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But with only days left before that deadline, the two utilities are far from a compromise over their conflicting plans for the project.
Up in the air
The Fairfield County site has been in limbo since July 31, when the two utilities set off a political maelstrom by quitting the project after nearly a decade of work that cost $9 billion, including more than $2 billion charged to S.C. power customers through higher power bills.
The construction effort, meant to establish South Carolina as a leader in a nuclear renaissance the utilities and S.C. lawmakers thought was coming, was plagued by delays, cost overruns and the March 2017 bankruptcy of lead contractor Westinghouse.
However, Santee Cooper officials and some S.C. elected leaders, including Republican Gov. Henry McMaster, have expressed hope the construction could one day be resumed and finished – perhaps a decade from now when a different regulatory atmosphere makes nuclear power practical again.
Lawmakers have held nearly a dozen hearings this fall into what went wrong at the project. At an Oct. 25 hearing they were surprised by testimony that SCANA, which owns 55 percent of the project, was leaving components at the site unprotected, exposed to the elements and in danger of deteriorating.
Choosing not to preserve the reactors is part of SCANA’s strategy to show the Internal Revenue Service it has abandoned the plant and deserves a $2 billion tax write-off. Giving up the company’s hard-won operating license for the reactors by Friday is another way to show SCANA should be eligible for that tax break.
The $2 billion write-off would help pay down the $4.9 billion in construction costs that SCANA has paid for the project. That could lower the $27 a month that the utility now is charging its electric customers on their power bills for the failed project, SCANA has said.
SCANA says it will seek the tax write-off no matter what. But, in recent weeks, it has floated an option that also might give the project a second life.
In a Dec. 4 letter to SCANA senior vice president and general counsel Jim Stuckey, Santee Cooper senior vice president and general counsel Michael Baxley wrote the two utilities had discussed transferring ownership of the Fairfield County site and its operating license to Santee Cooper, which owns 45 percent of the project.
That proposal would give Santee Cooper, already struggling with its own $4 billion in nuclear debt, sole responsibility for the costs of maintaining or salvaging the site. SCE&G, meanwhile, still would be responsible for its share of mechanics liens — $240 million in unpaid bills as of October for work done — against the site and other liabilities.
The proposal would not affect V.C. Summer’s Unit 1, a nuclear power reactor that SCE&G has operated at the site for decades.
Santee Cooper has said it doesn’t know how much it would cost to protect valuable components for the abandoned Units 2 and 3, hire security staff and pay workers to occasionally operate machinery that might otherwise rust over.
But officials have estimated it would cost about $15 million a year – a figure some lawmakers say Santee Cooper should consider paying to keep alive the possibility of the plant’s completion.
“What I would hate to do is throw away $9 billion and then, in 20 years, have to have a nuclear plant,” said state Senate Majority Leader Shane Massey, an Edgefield Republican who co-chairs the Senate committee investigating the project’s failure.
State Sen. Mike Fanning, D-Fairfield, whose district includes the Jenkinsville construction site, said it would be “irresponsible” for Santee Cooper not to pony up to preserve the unfinished reactors.
Fanning called the $15 million-a-year cost small potatoes compared to the money already spent on the project. “They need to step up and take that asset and make sure we’re protecting the options of the future.”
‘It has to be equitable’
Further negotiations between Santee Cooper and SCANA are possible, the utilities told The State Friday.
“SCE&G believes challenges associated with such a transfer to Santee Cooper could be addressed adequately through further discussion and negotiation if Santee Cooper is interested,” said Eric Boomhower, a spokesman for SCANA, SCE&G’s parent company. “However, SCE&G intends to preserve the $2 billion tax deduction and use it for the benefit of SCE&G’s customers under any alternative.”
SCANA’s latest proposal has several problems that “prevent Santee Cooper from accepting the proposal,” Santee Cooper senior vice president Baxley wrote.
For example, Baxley wrote, the deal would shift the financial risks of preserving the site to Santee Cooper’s customers alone – rather than both companies. It also would grant SCANA immunity from being sued by Santee Cooper over the nuclear venture.
Santee Cooper also says there is not enough time before SCANA’s Friday license deadline to determine the value of the site, what it will cost to protect equipment and materials there, and how many years it could expect to pay that annual cost.
SCANA has not countered with a proposal to address those concerns, Santee Cooper spokeswoman Mollie Gore said.
“We can’t let our customers take on a disproportionate risk and cost of site preservation,” she said. “The site should be jointly preserved. Obviously, for us, it’s going to maximize options and best preserve the value of the assets. But it has to be equitable.”
Gore said she did not have any more information about why Santee Cooper balked at SCANA’s proposal that Santee Cooper agree not to sue SCANA.
Gov. McMaster, who has worked for months to recruit a utility to buy Santee Cooper, thinks the state-owned utility’s sale “would solve many of the problems that we’re facing regarding the V.C. Summer debacle, including this one,” his spokesman said.
In the absence of any sale of Santee Cooper, “SCANA and Santee Cooper need to do the right thing by their customers in preserving this site,” McMaster spokesman Brian Symmes said.
Mike Couick, chief executive of the association that represents the 20 cooperatives that buy most of Santee Cooper’s electricity, says he is confident the leaders at both utilities can cut a deal before Friday.
“We’re often blinded by what we think we know,” Couick said. “What we think we know right now is that it will be nearly impossible to restart construction of those two units in Jenkinsville. Of course, things change, and it may be very wise to restart construction of one or both of those units.”