Warnings were raised years before utilities abandoned nuke project

With an ambitious agenda to build two atomic reactors near Columbia, SCE&G painted a bright picture for years about progress on the nuclear expansion project it had undertaken with state-owned utility Santee Cooper.

But unknown to many people was the magnitude of problems that contributed to the multi-billion dollar project’s demise last month.

Signs of trouble began to surface even before construction started in 2012, state records show. Problems ranged from poorly designed equipment to trouble getting key project components from contractors, according to documents reviewed by The State newspaper.

Had the public known about the extent of the problems, that knowledge could have saved potentially billions of dollars by forcing SCE&G and Santee Cooper to pull the plug on the project sooner, opponents say. A small group of environmentalists tried to get the word out, but say utility arguments appeared to carry more weight with lawmakers and the public.

Meanwhile, boosters of the nuclear reactor effort say they might have been able to save the project if the power companies had been more forceful in relaying signs of trouble.

“We are doing all kinds of things now that we could have done in a partnership a long time ago, if we had been reached out to and told ‘this is becoming more difficult than we originally anticipated,’” said Sen. Mike Fanning, a Fairfield County Democrat and nuclear project supporter. Fanning, who is trying to revive the project, said the community heard whispers about problems, but never much official from the power companies.

SCE&G and Santee Cooper said July 31 they were abandoning the project after spending $9 billion and nine years planning for the two new reactors. They cited the bankruptcy of lead contractor Westinghouse, increasing costs and less-than-expected energy demand as reasons for the decision. SCE&G expressed concern about being able to get production tax credits for the project, while also saying it could not continue without Santee Cooper’s support. Santee Cooper’s board voted to pull out of the project before SCE&G took a similar position.

Collectively, ratepayers of SCE&G and Santee Cooper already have been billed about $2 billion for a nuclear project that won’t be built. SCE&G is now mulling whether to charge customers an additional $2.2 billion for remaining costs associated with the abandoned reactors, which were only 34 percent finished when the work was shut down last month.

The utilities blame many of their problems on chief contractor Westinghouse, which filed for bankruptcy in March. SCE&G spokesman Eric Boomhower referred questions from The State to recent company statements in July and August explaining the utility’s reasons for abandoning the project. Boomhower said Saturday that the utility would provide more details later.

“Further perspective regarding our decision to file for abandonment, and the factors driving that decision, will be provided through a transparent regulatory process that allows for public input and a structured, objective review by the Public Service Commission,’’ Boomhower said in an email Saturday.

Santee Cooper spokeswoman Mollie Gore said the magnitude of the challenges became clearer after Westinghouse’s bankruptcy. That’s when her company received previously unknown information from Westinghouse and launched a detailed study on the pros and cons of continuing, she said. Gore said Santee Cooper ultimately decided to quit the project after a four-month investigation. It would have cost Santee Cooper about 75 percent more than originally planned, she said.

State Rep. Kirkman Finlay, R-Richland, said the utilities knew about plenty of difficulties at the V.C. Summer site long before the March bankruptcy by Westinghouse. But Finlay said many state lawmakers were unaware of the breadth of the problems affecting the project. He laid particular blame on SCE&G and its parent company, SCANA. The utility, which serves 700,000 customers in the Columbia and Charleston areas, was the senior partner on the nuclear expansion effort.

In 2013, SCE&G held a tour for the media, pronouncing the nuclear project in good shape and under budget. Company officials acknowledged some problems, but continued to speak optimistically at a second media tour in 2016, according to stories in The State newspaper.

“I think the majority of the Legislature believed the PR put out by SCANA that all was good,’’ Finlay said, noting that SCE&G should have let the public know about challenges it was having with its chief contractor, Westinghouse.

“Westinghouse was clearly misleading SCE&G, but that in no way absolves them of blame,’’ Finlay said. “My opinion is that management of this project was exceptionally weak.’’

If problems were discussed by the SCANA board, it would have been difficult for the public to learn anything, because the SCANA board meetings are not advertised. At the same time, even though Santee Cooper is a state agency, its board met in closed session multiple times to talk about the project.

Construction reports filed with the S.C. Public Service Commission detail a litany of troubles that dogged the nuclear effort by SCE&G and Santee Cooper. Among them:

▪ In 2009, the U.S. Nuclear Regulatory Commission expressed concern about whether a reactor shield building had been designed to withstand the impact from an airplane crash. It also was concerned about how spent fuel racks would be affected by earthquakes. Delays in getting a combined license from the NRC delayed the nuclear project by 11 months, according to Santee Cooper.

▪ In 2010, SCE&G said the lack of quality control by one of its main contractors “appear to have affected the quality of products being manufactured.’’

▪ In 2011, federal inspectors could not complete an audit of a contractor because so little work was being done.

▪ In 2011, construction crews ran into a layer of granite that was deeper than expected. The finding prompted a recommendation that workers install more concrete to create a level surface.

▪ In 2011, SCE&G reported that it was having trouble getting major components completed by a contractor.

▪ The next year, SCE&G said a schedule for producing major parts for the project “remains a significant focus area.’’ Some fabrication work for plant components had been delayed, in part because redesigns were needed.

▪ In 2012, SCE&G said there had been delays in reaching milestones for, among other things, a containment vessel and a reactor vessel at the site. Those are major pieces of a nuclear power plant.

▪ In 2012, NRC inspectors found that the method being used to assemble the reinforcing steel in the project’s concrete basemat was out of compliance with plans. Westinghouse had to redo the work using an alternative method.

Also, in 2014, a federal inspection of a facility in Louisiana, where some components of the Jenkinsville plant were made, showed that “certain activities were not conducted in accordance’’ with Nuclear Regulatory Commission requirements.

Unexpected problems are common on many construction projects. But the V.C. Summer effort was especially challenging because it was one of the first nuclear reactor construction efforts in the U.S. in decades – and it involved a reactor design that had never been relied on in the U.S. before, said Columbia lawyer Bob Guild and Tom Clements, an adviser to Friends of the Earth. Although the AP 1000 reactor design was pitched as better and safer, it only makes sense that difficulties would result from something that new, they said.

“It all boils down, in my opinion, to hitching their wagon to this highly technical and complex design for generating electricity,’’ Guild said.

The power companies initially said they could build the project for about $11 billion and complete the first reactor by 2016. The most recent estimates say that if the project had been finished, the costs would have been more than $20 billion, with the second reactor not finished until 2024.

Beyond construction delays and rising costs was how the expected growth in energy demand had leveled off since the project was first launched in 2009, SCE&G and Santee Cooper have said recently. Santee Cooper, for instance, would have had up to 44 percent excess capacity after the project was to be completed, but needed only about 12 to 15 percent. Both SCE&G and Santee Cooper have scaled back their projected need for power in recent years.

Testimony from 2008 predicted problems with the twin-reactor effort from the start.

When the nuclear project was being considered for approval by state regulators, former Public Service Commission member Buddy Atkins warned that the demand for energy was likely to slow down – and the PSC should approve no more than one reactor. He said people were becoming more energy efficient. Santee Cooper cited energy efficiency as a reason its demand is not as great today as forecast a decade ago.

In his testimony, Atkins also said some nuclear projects that had been started in the past had not been completed because energy forecasts changed. His 2008 testimony focused on SCE&G because Santee Cooper, as a state utility, is not regulated by the PSC.

“The current commission should not venture down a similar path regarding the imprudent construction of unneeded nuclear capacity based on faulty or inaccurate forecasts,’’said Atkins, who served on the Public Service Commission from 2000-2004.

Guild, a Sierra Club lawyer, said the group’s own experts voiced the same opinions when the PSC was considering whether to approve the nuclear project under a new law that made construction easier. Then in 2012, Vermont Law School economist Mark Cooper, who specializes in nuclear issues, told the PSC it would be wiser to stop the project before costs rose any higher. Cooper is working with the Sierra Club and Friends of the Earth.

The troubles at the site didn’t surprise Guild and a small group of environmentalists who oppose nuclear power. Even though they philosophically do not believe in building more nuclear plants, activists from the Sierra Club and Friends of the Earth raised questions as far back as 2008 about the cost of the project and how it might affect ratepayers. Through the years, they held signs and acted out satirical plays, in an effort to raise awareness.

Despite the efforts, Guild and others said they were able to gain little more than moderate support.

“There were so many issues, but people didn’t pay attention’’ said Leslie Minerd, a longtime environmental activist and Five Points business owner. “Legislators bought what SCE&G said hook, line and sinker. They were listening to them before us.’’