Regulators had ‘heightened’ concern about doomed nuclear plant years before shutdown

The V.C. Summer nuclear expansion project faced so many obstacles, ranging from a lack of materials to a shortage of workers, that it was unlikely to be finished in time to earn $2 billion in federal tax credits vital to offsetting its cost, state regulators fretted in 2016.

That concern is included in records provided by state regulators Wednesday, showing what they knew and when, and what they were saying to the project’s owners, Cayce-based SCANA and the state-owned Santee Cooper utility.

Meanwhile, state legislators said Wednesday they wish regulators had shared with them their concerns about the project’s problems.

Had the Fairfield County nuclear reactors been built on time, the federal credits could have helped limit the price tag of the project, which now costs $27 a month to customers of SCANA subsidiary SCE&G.

By June 2016, state regulators had told SCE&G they were positive one of the two reactors under construction would not be finished by the 2020 deadline for the tax credits. They doubted the other reactor would be finished in time to qualify.

Just over a year later, SCE&G and Santee Cooper abandoned the project after charging their customers a combined $2 billion for it.

Letters provided by the S.C. Office of Regulatory Staff show the agency was increasingly concerned about whether the reactors would be completed on time, starting in 2014. The correspondence is the latest in a series of documents to surface detailing shortcomings at the V.C. Summer site.

Letters show the agency was concerned about construction delays, stemming from the failure of chief contractor Westinghouse to buy necessary equipment and materials on time. ORS also wrote to SCANA about a lack of skilled workers on site and a failed effort to hire 1,000 more craft workers for construction tasks. Workers at the site also were not productive enough to hit construction milestones, agency records show.

“The ORS is currently in a heightened state of concern regarding the construction cost overruns and schedule delays for V.C. Summer nuclear units 2 and 3,” agency director Dukes Scott wrote in a June 30, 2016, letter to SCANA, SCE&G’s parent company.

Told of the documents, state legislators said Wednesday they wish state regulators had told them about the project’s problems earlier. The Office of Regulatory Staff, which reports its findings to the state Public Service Commission, told that commission about its concerns, ORS spokesman Ron Aiken said.

State Rep. Micah Caskey, R-Lexington, said the ORS findings offer more evidence that SCE&G recklessly plowed forward with a project that was veering toward abandonment.

“This just continues to infuriate me that SCE&G, despite numerous warnings from numerous parties, chose to pursue profits over people,” Caskey said. “People have suffered in the form of higher bills, and a lot of people are going to suffer a lot more in the future. It’s solely the result of executives choosing to put profits over people.”

The documents show SCANA told regulators it agreed with many of their concerns and was making improvements.

The most important step the utility made was amending its contract with Westinghouse to include a fixed price for the project, shifting the responsibility for any cost hikes to the contractor, SCE&G spokesman Eric Boomhower said in a statement.

The company also offered bonuses and withheld payments to Westinghouse as part of a “carrot and stick” approach to improve performance and avoid delays at the site, Boomhower said.

SCANA walked away from the project after Westinghouse filed for bankruptcy in March 2017, saying the effort had become too expensive to continue. Originally expected to cost about $11 billion, 2017 estimates placed the cost at more than twice that amount.

Scott’s four-page 2016 letter to SCANA said it was obvious that one of the two reactors would not be completed in time for SCE&G to get tax credits. The other unit also was in jeopardy, though it could be completed in time if improvements were made quickly, Scott wrote.

The reactors needed to be finished and producing power by Dec. 31, 2020, to qualify for the tax credit.

A key concern cited in Scott’s June 2016 letter was Westinghouse’s failure to order equipment needed for the project. While getting major nuclear components had been a problem, other, less sophisticated equipment also was not always available, the letter said. That included steel rebar, welding rods, structural steel, bolts and “other standard construction commodities.”

“Our consultant states that he has never worked on a nuclear project that was delayed by the lack of availability of standard rebar,” Scott told SCANA in his letter. “Standard rebar unavailability has resulted in construction delays of critical path activities.”

Regulatory staff correspondence to SCANA also shows:

▪  In 2015, poor inspections at an Oregon company that made reactor components were causing “unnecessary delivery days.”

▪  In 2015, equipment needed for the site’s shield building had been slow coming in, delaying the effort by four months

▪  In 2015, the continued role of a major contractor, CB&I, needed “immediate attention.” CB&I’s Lake Charles, La., plant had experienced repeated delays in making parts for the nuclear project.

▪  In 2015, the schedule for completing the reactors used “overly optimistic assumptions.”

▪ In 2016, Westinghouse had not allowed Fluor Corp. the freedom to oversee the project as necessary. Fluor was brought in to help the struggling construction effort but did not have direct control over laborers on the site. Scott wrote that Fluor – not Westinghouse – had the necessary expertise and needed more responsibility.

▪  In 2016, repairs to a nuclear turbine building were “not progressing well.” The repairs were related to unacceptable concrete joints that had been discovered.

▪  In 2016, progress on the site’s turbine buildings was up to six months behind schedule because of labor shortages and diversion of work to another part of the site.

▪  In 2016, progress completing containment areas of a reactor building “has been problematic, primarily due to design changes and commodity shortages.”

▪  In 2016, concerns were rising about the number of injuries at the construction site that resulted from a “declining safety culture.”

Even after the project’s failure, ORS and the two utilities have not been forthcoming about what they knew, said state Rep. Peter McCoy, the Charleston Republican who chairs the House panel investigating the V.C. Summer debacle.

“Asked pointed questions under oath, everybody seemed to be ducking the issue,” McCoy said. “It doesn’t matter what agency it is. It doesn’t matter who we talked to. Not a single person or entity wanted to do that and, to me, that is a huge problem.”

This story was originally published December 6, 2017 at 6:37 PM with the headline "Regulators had ‘heightened’ concern about doomed nuclear plant years before shutdown."