The doomed V.C. Summer nuclear project suffered from flawed construction plans, faulty designs, inadequate management of contractors, low worker morale and high turnover, according to a lengthy and long-secret report released Monday by S.C. Gov. Henry McMaster’s office.
The report, completed by the Bechtel Corp. about 18 months before the project was shut down in July, also notes strained relationships between the project’s contractors, as well as a lack of shared vision and accountability among the major companies involved.
Bechtel’s report, which senior partner SCE&G did not want released, might answer questions from lawmakers about what went wrong with the project. Many lawmakers want to know whether the fiasco could have been prevented.
Cayce-based SCE&G and state-owned Santee Cooper spent nine years and $9 billion on the Fairfield County project before pulling the plug July 31. Ratepayers at both companies have been charged at least $2 billion for two nuclear reactors that won’t be completed. The utilities have said rising costs, construction delays and the bankruptcy of chief contractor Westinghouse led them to walk away.
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Lawmakers fumed after reviewing the report.
“I couldn’t believe it when I first learned the utilities weren’t going to release the report. Now I know why,” said state Rep. Nathan Ballentine, a Richland Republican who is on a House committee investigating the project’s failure. “No part of this construction and planning appears ‘prudent,’ and as such, I think a strong case can be made that ratepayers and taxpayers shouldn’t be stuck with the bill for what is now basically a hole in the ground.”
State Rep. James Smith said the Bechtel report confirms to him that problems were not isolated to Westinghouse. SCE&G and Santee Cooper also share the blame, the Richland Democrat said.
“It’s what I suspected: that the bankruptcy of Westinghouse had little to nothing to do with the project’s failure,” Smith said. “The reality is that it was built to fail. ... It was never going to produce any power.”
The Bechtel report cited “significant issues” facing the project that needed addressing.
Among the problems, the report says, was that plans and schedules for the project did not reflect actual circumstances; the construction contract did not appear to be serving Santee Cooper, SCE&G or Westinghouse well; and construction designs often were “not constructable,” which caused significant changes and delays.
Construction modules, built off site and touted as a way to ensure the project’s success, were a “detriment to the project progress and consequently the budget,” Bechtel wrote.
A key finding in the report addresses the utilities’ plan to use the AP 1000 reactor, a technology that had not been used in U.S. nuclear plants before. The report said challenges were to be expected because of the reactor type and because no nuclear plants had been built in the U.S. in decades. But it also said the V.C. Summer project “suffers from various fundamental” contract and management problems that needed resolution for the effort to succeed.
The report said contractors had not been transparent or accurate to the utilities about the project’s progress, and the utilities did not have an appropriate project team to assess or verify those contractors’ progress reports.
To resolve problems outlined in the report, Bechtel suggested a number of changes that needed to be made.
Recommendations included creating a new, “more achievable” project schedule and ramping up efforts to identify design changes that were needed. In addition, the report said companies needed to stay on top of resolving technical problems that were arising and to increase some staffing levels. And the report suggested a need for improved craftsmanship.
Project managers also needed to improve efforts to make sure equipment was delivered in time to meet construction dates, according to the report.
Investor-owned SCE&G did not want the report released. In a Sunday letter to McMaster, the utility pleaded with the governor to keep the report confidential if Santee Cooper, the project’s minority owner, gave it to him.
If released, the report could hurt SCE&G in lawsuits, the company said. The letter also said releasing the document could hurt SCE&G and Santee Cooper in their efforts to recover “potentially billions” of dollars from Westinghouse.
Monday’s release follows two weeks of efforts by lawmakers to obtain the Bechtel report.
McMaster’s office had demanded late last week and again Saturday that Santee Cooper hand over the report. After initially hesitating, the company gave McMaster’s office the Bechtel report at 11:30 a.m. Monday.
The governor’s office said it could find no reason to keep the report secret and released the document late Monday afternoon.
“The governor’s office received a copy of the full Bechtel report of Feb. 5, 2016, from Santee Cooper general counsel shortly before noon today at the Cracker Barrel restaurant in Summerville,” McMaster’s office said in a statement Monday. “Gov. McMaster has reviewed the document and believes there is no basis for their ‘assertion of privilege’ or confidentiality. Therefore, in the legitimate interest of the ratepayers, he has directed this information to be released to the public immediately.”
Eric Boomhower, a spokesman for SCANA, SCE&G’s parent company, told the Associated Press in a statement earlier Monday the utilities had hired Bechtel “to assess challenges to progress on our jointly owned nuclear construction project in anticipation of litigation with Westinghouse.”
After receiving the Bechtel report, Boomhower said, SCANA and Santee Cooper “established independent oversight and focused improvement initiatives on the project. Although the project continued to have challenges, those actions did result in improvement.”
SCE&G issued a statement just before 10 p.m. Monday emphasizing that the company took steps to address “challenges” at the nuclear construction site. Among those were establishment of a construction oversight board and organizing a project management team to provide more aggressive oversight of Westinghouse.
Efforts to reach officials from Santee Cooper Monday night, after the report’s release, were unsuccessful.
Bechtel detailed a laundry list of problems at the site, laying blame with the utilities as well as the contractors.
The firm found:
▪ Contractors’ construction plans were not specific to the V.C. Summer project and, thus, could not serve as a firm basis to calculate the project’s cost or completion date.
▪ At one point, the number of supervisors was “quite high’’ when compared to the 800 craft workers on the project.
▪ Contractors’ designs needed “significant” changes before construction.
▪ Project managers had not planned far enough ahead to adapt to the need for design changes.
▪ Turnover among non-manual workers was high.
▪ Productivity dipped because of the bad designs, sustained overtime, complicated work packages and an aging workforce. Employees worked too many hours for extended periods of time.
The report also made detailed and technical recommendations, many of which fell on the contractors.
However, the firm recommended that SCE&G and Santee Cooper hire an experienced management organization, apart from the utilities’ own staffs, to keep the project running smoothly.
Bechtel also recommended SCE&G and Santee Cooper sit down with its contractors to reassess the project’s goals and realistically forecast its remaining cost and completion date. It recommended the contractors plan better for design changes and to improve productivity and retention by capping workers at 48 hours per week.