The board overseeing South Carolina’s state-owned power utility has voted to suspend its involvement in two nuclear reactors under construction in Fairfield County, making the project’s future much less viable.
The Santee Cooper Board of Directors voted unanimously Monday to suspend construction of Units 2 and 3 at the V.C. Summer Nuclear Station in Jenkinsville. Santee Cooper has a 45 percent stake in the future project. Private utility South Carolina Electric & Gas (SCE&G) has a 55 percent share. Board members said the decision would help them avoid nearly $7 billion in costs to complete the project, which has fallen years behind and billions over the original estimate.
“Generation diversity remains an important strategy for Santee Cooper, but the costs of these units are simply too much for our customers to bear,” Board chairman Leighton Lord said in a statement. “Even considering these project challenges, Santee Cooper is proud of our role in this initial effort to restart a 30-years-dormant industry. Nuclear power needs to remain part of the U.S. energy mix.”
The board’s decision ended months of speculation after the project’s lead contractor Westinghouse filed for bankruptcy in March. Both Santee Cooper and SCE&G had since worked on a schedule and cost comprehensive analysis to determine whether to proceed with work on both reactors, just one or to scrap the project entirely.
SCE&G will present its plan to the state Public Service Commission on Tuesday.
The project’s initial cost was expected to be around $10 billion, with the first reactor going online in March 2017. However, Santee Cooper said it has spent approximately $4.7 billion in construction and interest to date, but would end up paying $11.4 billion under current projections. The project also would not be entirely complete until 2024. That would miss a critical 2021 deadline for the project to be eligible for federal tax credits which could help recoup construction costs.
“After Westinghouse’s bankruptcy and anticipated rejection of the fixed-price contract, the best case scenario shows this project would be several years late and 75 percent more than originally planned,” President and CEO Lonnie Carter said. “We simply cannot ask our customers to pay for a project that has become uneconomical. And even though suspending construction is the best option for them, we are disappointed that our contractor has failed to meet its obligations and put Santee Cooper and our customers in this situation.”
Santee Cooper and SCE&G’s contract with Westinghouse required Westinghouse to provide substantially complete units in 2016 and 2019. Negotiations last year required the nuclear company to take on any additional costs beyond the $6.2 billion estimated at the time to finish work. However, problems with the relatively new technology and construction modules created expensive headaches for Westinghouse and its parent company Toshiba. Those financial issues eventually led to March’s bankruptcy filing.
Complicating matters is that natural gas prices have plummeted since the utilities began working on the nuclear plant in the late 2000s. Demand for power has also grown much more slowly than anticipated in the past decade, raising questions about the need for massive new generation abilities at V.C. Summer.
The most recent analysis, anticipating the rejection of the contract by Westinghouse in bankruptcy proceedings, shows the final cost for Santee Cooper to complete the project would be $8.0 billion for construction and approximately $3.4 billion for interest. The schedule delays increased the projected interest costs 143 percent over the original plan.