Billions down the drain as new nuclear plants scrapped

ASSOCIATED PRESS
COLUMBIA
Published 01.08.2017 22:37
Updated 01.08.2017 22:38
A new cooling tower for a nuclear reactor under construction near two operating reactors at Plant Vogtle in Waynesboro, Ga., operated by Westinghouse Electric Co., the U.S. nuclear unit of Japan's Toshiba Corp.
A new cooling tower for a nuclear reactor under construction near two operating reactors at Plant Vogtle in Waynesboro, Ga., operated by Westinghouse Electric Co., the U.S. nuclear unit of Japan's Toshiba Corp.

Billions of dollars spent on two new nuclear reactors in South Carolina went up in smoke when the owners nixed plans to finish them after years of cost overruns, dealing a severe blow to the industry's future

The two new nuclear reactors in South Carolina which were set to be among the first built in the U.S. in decades, have now gone up in smoke because the owners nixed plans to finish them after years of delays and cost overruns. While the decision will save customers billions in additional costs, customers of the two utilities - Santee Cooper and South Carolina Electric & Gas - may get little to nothing refunded of the billions they've already paid for the now-abandoned project.

"I'm disappointed today not just for Santee Cooper and its customers but for our country and the industry as a whole," said Santee Cooper CEO Lonnie Carter. "If you really believe we need to reduce carbon, this was the way to do it."

Energy demands are far less than the utility's pre-Great Recession projections that factored into the initial decision to build. But Monday's decision may eventually result in the utility putting a coal-fired unit idled earlier this year back in operation. Another option for supplying power needs in the decades to come include building a natural gas unit.

"Absolutely, this pushes us back to more carbon, whether it's natural gas or coal," Carter said.

Santee Cooper's board said the decision to end construction will save customers an estimated $7 billion. The utility had already spent about $5 billion for its 45 percent share of the project, and completing it would have cost an additional $8 billion, plus $3.4 billion in interest.

"I'm not celebrating," said Tom Clements of Friends of the Earth, which has questioned the project from the outset. "This is a sad day for South Carolina. So much money has been wasted. Ratepayers are losers any way you take it."

He said the group will work to "get to the bottom line of how this happened, who's responsible" and what that means for customers. Gov. Henry McMaster called for legislators to hold hearings to get customers' questions answered. The project has been shrouded in doubt since earlier this year, when primary contractor Westinghouse filed for bankruptcy protection. The utilities have since determined the project likely wouldn't have been finished until 2024. Under a timeline adopted in 2012, the first reactor was supposed to be operational earlier this year. Westinghouse hasn't been forthright since, according to Santee Cooper.

South Carolina Electric & Gas, which owns 55 percent, announced its plans shortly after Santee Cooper's unanimous vote. Under the approved Santee Cooper resolution, all work will end within six months. How quickly within that timeframe workers at the site will lose their jobs is uncertain. About 5,000 people are employed at the site by contractors and subcontractors. SCE&G employs an additional 600 workers for the project, according to the utility.

The utilities announced last week that Westinghouse's parent company, Toshiba Corp., agreed to jointly pay them $2.2 billion regardless of whether the reactors are ever completed. Rates are rising due to environmental projects, and the money could offset either those costs or debt, Carter said. But another unknown is whether Toshiba will actually pay. In May, the Tokyo-based company projected a 1.01 trillion yen ($9.2 billion) loss for the fiscal year that ended in March. The reactors were planned for the V.C. Summer Nuclear Station north of Columbia. Construction contracts with Westinghouse were signed in 2008, and the project was so far about one-third completed.

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