SCANA officials testify about abandoning nuclear construction
State Public Service Commission members criticized SCE&G Tuesday for spending billions of dollars on a nuclear expansion project, then deciding this week to walk away from the partially built reactors in Fairfield County.
The commission, which regulates investor-owned utilities in South Carolina, peppered utility executives Kevin Marsh, Steve Byrne and Jimmy Addison with questions during a meeting to discuss why the effort fell apart. SCE&G had raised electricity rates for customers nine times – with PSC approval – to finance the project.
At T uesday’s meeting, PSC members seemed unconvinced by the company’s reason for shelving the project that the utility launched nine years ago with partner Santee Cooper, a state-owned utility.
PSC chairman Swain Whitfield said public trust was at stake, and said the commission was “blindsided” by the company’s decision Monday to quit building the reactors because of the expense.
Whitfield said ratepayers already had taken a hit to finance the project. Now, the people of Fairfield County who had depended on jobs created by the plant will suffer, he said. The nuclear plant was expected to bring millions of dollars in tax revenues to one of South Carolina’s smallest counties for roads, industrial parks and schools.
“This is going to shatter lives, hopes and dreams in Fairfield County and in the state of South Carolina,’’ said Whitfield, who is from the county north of Columbia.
About 5,100 people worked at the construction site, many of them contractors who were sent home Monday after SCE&G and partner Santee Cooper decided to pull out of the project. Whitfield called Monday a “grim day’’ in Fairfield.
PSC member Elizabeth Fleming said she was concerned that the project was being abandoned after so much effort.
“It was like a gut punch,” Fleming said.
Originally expected to cost about $11 billion, the price tag of the reactors grew to $14 billion and ultimately could have topped $20 billion by the time they would have been completed in 2024, officials said this week.
The Public Service Commission has signed off on rate increases that total $1.4 billion for SCE&G customers to finance the twin, 2,200-megawatt construction effort in Jenkinsville. Public interest groups and environmentalists have criticized the PSC for failing to ask more probing questions in the past when SCE&G sought rate increases.
But the board had more to say Tuesday about the project’s failure – and whether the work could be revived, as some politicians in Fairfield County advocate.
Construction of the reactors is about one-third complete, but virtually all of the equipment is on site and was ready to be installed, according to SCE&G. Collectively, SCE&G and partner Santee Cooper have spent about $9 billion on the project.
Fleming questioned whether “there could be an opportunity if the government or some other entity is interested in coming forward.’’
Her questions were echoed after the meeting by Sen. Mike Fanning, D-Fairfield, Rep. MaryGail Douglas, D-Fairfield, and local officials. They want the project continued. Douglas said she favors using state funds to help bail out the project. They ripped SCE&G and Santee Cooper’s decision to stop building the reactors. Douglas said the shutdown has left many without jobs.
“How do they do that with a conscience to the people of this state?’’ Douglas said. “I think there are ways we can come back to the table and talk about this.’’
SCE&G officials, however, said they had been unsuccessful in getting help from the federal government or other utilities to complete the project. Utility officials even contacted U.S. Energy Secretary Rick Perry and the White House, said Marsh, chief executive of SCANA, SCE&G’s parent company. He declined to name the utilities he had spoken with.
“I’m not optimistic,’’ Marsh said, noting that he had been to Washington and “had very direct discussions with high officials at the White House, the Department of Energy and other connected people in the energy sector business.’’
SCE&G and Santee Cooper blamed chief contractor Westinghouse for the project’s failure. Westinghouse filed for bankruptcy in March.
The project fell apart because of problems getting information from Westinghouse, as well as the inability to get component parts of the project in a timely manner, SCE&G officials said. But the biggest obstacle was the departure of partner Santee Cooper, officials said. The Santee Cooper board voted Monday to abandon the effort, which left SCE&G without the help it needed to continue. It had planned to continue the project by building just one of the two reactors until learning of Santee Cooper’s intent, officials said. Santee Cooper said it has plenty of capacity and it could not risk further rate increases to customers.
SCE&G officials said the project had become too costly for them to complete, but they pledged during the meeting to limit rate increases as they wind down the project. They were expected to submit a plan to the PSC later Tuesday to recover some $4.9 billion the company already has spent, but said they also had a plan to minimize more rate increases in the future.
Consumer advocacy groups and environmental organizations, which also had representatives at Tuesday’s meeting, had pushed the utilities to quit the project before rates rose again, and they now want SCE&G and Santee Cooper to refund customers. Ultimately, both power companies agreed that continuing the work would be to hard on ratepayers.
“We didn’t feel like it was fair to continue with construction,’’ Marsh said.
SCE&G and Santee Cooper had worked since 2008 on the project after the state Legislature had a year earlier approved a law favorable to SCE&G. The law, the baseload review act, made it easier for SCE&G to pay for the project by reducing the risk. The company could for the first time charge customers for part of the work before the two reactors were completed.
The company says it plans to use the proceeds from a $2.2 billion settlement with Toshiba, the parent corporation of Westinghouse, to limit further rate increases to customers “and lessen the impact on our customers for several years,’’ according to a news release Monday.