Santee Cooper’s outgoing chief executive Monday argued against selling off the pieces of two unfinished nuclear reactors in Fairfield County, saying the V.C. Summer expansion project could be finished some day.
Lonnie Carter, who said last month that he would retire early next year, also said the state-owned Santee Cooper utility had wanted to dump as much as half of its ownership stake in the Fairfield County venture. Eventually, Santee Cooper sold just 5 percent of the project to Cayce-based SCANA, already the venture’s majority owner.
Carter’s testimony came as state senators held a second hearing into how a nine-year, $9 billion effort to build two additional nuclear reactors at V.C. Summer failed, leaving S.C. power customers with nothing to show for their higher power bills.
A S.C. House panel also has met twice to grill officials from SCANA, Santee Cooper and state regulatory agencies on the project’s cost overruns and scheduling delays. Utility leaders have blamed those problems on the project’s lead contractor, Westinghouse.
Much of the testimony has centered on problems that led to the project’s July 31 abandonment, when SCANA and Santee Cooper learned of those problems and how they responded.
But Carter Monday offered a brief look at the reactors’ future.
“We should think about preserving the assets we have in Summer (Units) 2 and 3,” Carter said. “A decade from now, we might want to go back to that investment.”
Carter said it may make more sense to preserve the reactor components, virtually all of which already are on site in Jenkinsville, than sell them for 50 cents on the dollar to cover the project’s debts.
Regulations of carbon pollution, energy needs and other economic realities can change drastically over 10 years, making it sensible to finish construction one day, Carter said. S.C. utilities also could use the pause to learn from ongoing nuclear construction in Georgia and China, he said.
“In the utility business, a decade is not a long time to plan.”
SCANA leaders, who ultimately will decide the site’s fate, said they are considering the option of one day finishing the two reactors. Preserving the site would cost roughly $15 million a year, including staff to periodically run certain equipment and to keep the components safe.
“We will evaluate that, and I expect that to be in our filing with the (Public Service) Commission,” SCANA chief executive Kevin Marsh said.
Carter also disclosed Monday that Santee Cooper was looking to sell part of its 45-percent ownership stake in the reactors as early as 2010, after realizing it did not need all the energy two new reactors could produce.
The state-owned utility unsuccessfully tried to sell as much as 25 percent of the project, more than half of its 45-percent stake, Carter said.
In 2014, Duke Energy was interested in buying a 5- to 10-percent share, but talks fell through. That was because, while Duke wanted partial ownership of the project, it did not want to take on any of its risk, SCANA chief Marsh said Monday.
The Charlotte-based utility wanted to defer paying for its share and wanted a fixed price, regardless of any increase in the project’s cost, Carter said. “They wanted terms that weren’t favorable to us.”
Instead, SCANA agreed to buy a 5-percent share in the project from Santee Cooper in a deal that would have given the Cayce-based utility 60-percent ownership of the reactors once they went online and started producing electricity. SCANA also asked Santee Cooper not to try to sell more of its share of the project until it was finished, officials said.
During Monday’s daylong hearing, senators routinely circled back to a long-secret February 2016 report that diagnosed critical problems at the Jenkinsville site.
SCANA executives have downplayed the report, saying they were aware of the problems — even rejecting Westinghouse’s invoices for payment as early as 2011.
Among those problems, Carter said Monday, was a lack of productivity.
An analysis showed Westinghouse was completing about 0.3 percent of the project each month, he said. The contractor should have been completing 2 percent each month – more than six times faster.
Senators, in turn, wondered why the utilities continued to put up with Westinghouse’s failures.
SCANA leaders Monday said they did not think they had legal cause to terminate Westinghouse’s contract. They also said they wanted the power the two nuclear reactors could one day generate.
“Our desire was to complete the construction,” SCANA executive vice president Stephen Byrne said. “It wasn’t to terminate.”
Carter told the panel that Santee Cooper felt political pressure to finish the project. Despite that, the state-owned utility would have called it quits by the end of this year, he added.
Santee Cooper leaders knew they would have to prove to the public that they had no choice but to abandon the project, Carter said.
“People felt like these were important to the state and were encouraging us to get them done.”