SCANA, Santee Cooper to reassess reactors after Westinghouse bankruptcy

COLUMBIA, SC Two utilities that are building twin nuclear reactors in Fairfield County are re-evaluating the future of the troubled $14 billion construction project following the bankruptcy of top contractor Westinghouse Electric.

The utilities will spend at least the next 30 days determining whether the over budget, overdue reactors should be completed, and if so, how. Westinghouse wants out of the project, meaning SCANA and other contractors might have to take over the work, utility officials said.

But SCANA chief executive Kevin Marsh said Wednesday that his company hopes to see the project finished. The amount of energy to come from two additional nuclear reactors is needed to meet customer demands, he told investors.

Marsh made his remarks during a conference call in which one investor asked why the company doesn’t abandon the project as critics suggest.

“If we just cancel these plants, we still have a (power) generation issue we need to face,’’ Marsh said, within hours of Westinghouse’s bankruptcy announcement.

“Our commitment is still to try to finish these plants. That would be my preferred option. The least preferred option, I think realistically, is abandonment.’’

SCANA is a 55 percent partner in the project with state-owned Santee Cooper. About 5,000 people are working on the reactor project at the companies’ V.C. Summer nuclear plant near Jenkinsville.

Santee Cooper this week committed up to $250 million from leftover bond proceeds toward continued construction of the reactors for the next few months. SCANA did not say how much money it will spend during that period.

Westinghouse has agreed to stay on the job for the short term, according to SCANA and Santee Cooper. Fluor, the chief construction contractor, said Wednesday it has agreed to continue the construction work.

The Fairfield nuclear project has been debated in South Carolina for years. The Legislature agreed in 2007 to let SCANA raise customer rates to pay the upfront costs of construction. The company, with approval from the state Public Service Commission, has hit ratepayers with nine increases in their power bills to finance the project, according to the Office of Regulatory Staff.

Now, with designer Westinghouse in bankruptcy, critics said the utilities should scrap the new reactors. They fear the public will be hit with more rate increases by SCANA’s subsidiary, South Carolina Electric & Gas Co. SCE&G agreed last fall not to seek more rate increases above $7.6 billion, but the agreement could be changed.

“It’s a mess,’’ said Susan Corbett, among a chorus of project opponents and a leader in the state Sierra Club. “We want them to abandon the plant and take the money and do something else with it. Maybe they should put solar on everybody’s house or do wind farms.’’

Already known to be about $3 billion over budget, cost overruns apparently have grown. SCANA did not reveal the amount of additional project costs during Wednesday’s conference call.

Marsh said, however, that Toshiba, the parent corporation of Westinghouse, has agreed to pay for some of the overruns. He did not say how much.

SCANA and Santee Cooper still must verify the numbers, but it appears that commitments by Westinghouse and Toshiba should be enough to handle the extra cost, Marsh said.

“We expect that the resources available from Westinghouse and Toshiba, including its parental guarantee, are adequate to compensate us for the Westinghouse estimate of additional costs,’’ he said.

Earlier in the day, SCANA and Santee Cooper said they have reached agreement with Westinghouse to continue work – for now. The agreement was to be filed in court Wednesday.

One issue SCANA and SCE&G have had in recent months is cooperation from Westinghouse. The company has failed to provide information the utilities said they needed on progress and costs on the project, utility officials said. Only recently was an agreement reached and information became available, they said.

“It gives us critical direct access to resources and information that Westinghouse had not provided us to date, which will be important as we plan for the future of the project,” said Lonnie Carter, Santee Cooper’s president and chief executive officer.

Westinghouse, a major player in the nuclear industry, filed for bankruptcy protection this week after months of speculation. Toshiba, of Japan, is scrambling to stop huge losses from Westinghouse’s atomic construction projects, according to The New York Times.

Westinghouse said in a news release that it had obtained $800 million in debtor financing from a third party lender to help protect its core businesses, including the company’s nuclear fuel division. Westinghouse, in addition to its role in building the Fairfield nuclear plants, operates a large nuclear fuel factory on Bluff Road southeast of Columbia.

Gov. Henry McMaster issued a statement Wednesday saying that he hopes the project will be completed. McMaster said he’s spoken to U.S. Energy Secretary Rick Perry, as well as utility executives.

“Completion of the reactors at V.C. Summer Nuclear Station will provide our state with clean and plentiful electricity for generations to come,’’ McMaster said. “They are critical components to our future economic prosperity.

“I am confident that the plans and contingencies they have prepared will result in the completion of the project,” the governor said.

The South Carolina nuclear reactors, built near an existing SCANA reactor at the company’s V.C. Summer plant, are among four under construction in the southeast. Two reactors also are being built just across the Savannah River at Plant Vogtle in Georgia by power companies in that state. At one point the projects were seen as part of an effort to revive nuclear energy in the United States, but problems have cast shadows on that.

“This is a fairly big and consequential deal,’’ Richard Nephew, a senior research scholar at the Center on Global Energy Policy at Columbia University, told The New York Times. “You’ve had some power companies and big utilities run into financial trouble, but this kind of thing hasn’t happened.”