With $400 million for customers at stake and just days remaining before a year-end deadline, SCE&G and the state-owned Santee Cooper utility are not seeing eye to eye.
The two power companies, which led a failed, $9 billion effort to build two nuclear reactors in Fairfield County, can’t agree on how to abandon the project.
That disagreement could cost SCE&G’s 700,000 power customers, the Cayce-based utility’s attorney warned Santee Cooper in a pair of letters written earlier this month and obtained by The State newspaper.
The key issue is SCE&G’s effort to earn up to $2.2 billion in federal tax credits by proving to the Internal Revenue Service that it has abandoned the project for dead.
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The company has said the tax credits will help lower bills for its power customers, who already have paid $1.8 billion for the unfinished reactors.
SCE&G wants to collect the tax credits by Sunday because the newly passed federal tax law would lower their value by up to $400 million in 2018.
The investor-owned company is taking steps to prove it deserves the tax savings. But it is struggling to convince Santee Cooper – a state-owned utility that is not eligible for the same tax break – to cooperate with its efforts before the end of the year.
SCE&G said Thursday it has filed to surrender its operating license for the two reactors to the Nuclear Regulatory Commission – a move that effectively kills the project unless Santee Cooper agrees to take it over.
Over the past few weeks, SCE&G has been pushing Santee Cooper – which owns a 45-percent stake in the failed V.C. Summer project – to accept 100 percent ownership of the unfinished reactors.
However, Santee Cooper has balked at that move, which would require the Moncks Corner-based utility to bear the full cost of preserving the construction site – $15 million a year – so that it possibly could revive the project one day.
In a Dec. 13 letter to Santee Cooper, Jim Stuckey, general counsel for SCE&G parent SCANA, wrote that SCE&G can’t help pay those preservation costs since it must prove to the IRS it has wiped its hands of the project.
“SCE&G’s customers should get the benefit from the tax deduction and should not have to finance the remote possibility Santee Cooper or its successor ... might decide to re-start construction a decade or more from now,” Stuckey wrote.
But Santee Cooper says it has its own customers to consider, including more than 174,000 Grand Strand customers that it serves directly and 20 electric cooperatives that buy electricity from the state-owned utility for their 1.5 million customers.
The state-owned utility needs more time to evaluate the deal and wants to continue negotiations into 2018, Santee Cooper general counsel Michael Baxley wrote in a Thursday letter to SCE&G. The company still is uncomfortable taking on the site’s risks and costs for the foreseeable future, Baxley wrote.
In the same letter, Baxley wrote Santee Cooper had refused SCE&G’s request to mutually end the companies’ construction contract.
“Santee Cooper, too, must act in the best interest of its customers and thus, at this time, is not in a position to assume the significant unknown risks and potential liabilities as proposed in your letter,” Baxley wrote.
“There’s a lot of unknowns,” Santee Cooper spokeswoman Mollie Gore said Thursday. “We need the time to fully explore all of our options, even while we’re trying to preserve them so we can make a decision that brings a maximum benefit to our customers. We plan to continue working with SCE&G into 2018 to clear up some of the areas where we have questions.”
Santee Cooper’s board is scheduled to meet behind closed doors Friday to hear legal advice concerning the nuclear project.
It is unclear whether Santee Cooper’s refusal to terminate the contract threatens SCE&G’s ability to prove it has abandoned the project and earn the $2.2 billion tax credit that it is seeking.
In his Dec. 13 letter to Santee Cooper, SCANA’s Stuckey wrote that Santee Cooper’s resistance could cause SCE&G “significant harm.”
Still, SCE&G could continue to make the case that it has abandoned the project on its own.
SCE&G could give up the nuclear license without Santee Cooper’s approval. The Nuclear Regulatory Commission gave the permit to SCE&G, not Santee Cooper, commission spokesman Roger Hannah said. Unless the utilities have some other agreement, the NRC would not need Santee Cooper’s consent to cancel the license, he said.
The Summer site today is filled with nuclear equipment and half-built structures, according to the state Office of Regulatory Staff. One issue is whether to preserve the site by keeping that equipment in shape for a future restart of the project one day.
SCE&G and Santee Cooper worked on the nuclear construction effort for a decade before abandoning it July 31 after spending $9 billion.
Neither has any intention of continuing the project for now. But Santee Cooper has held out hope that it could be revived one day.