Customers shouldn’t bear the brunt of costs for failed projects like VC Summer Nuclear Station

This week, SCANA and state-owned utility Santee Cooper decided to abandon two nuclear power plants in Fairfield County after roughly five years of construction and $9 billion spent to date. Over 5,100 people will be out of work. Local businesses that relied on this workforce will suffer. No new energy capacity will be produced. The project will essentially render this once growing area a ghost town.

How did this happen? How can a project like this simply stop?

SCANA and Santee Cooper have jointly operated one nuclear plant in Fairfield County since 1983. In 2008, they decided to expand their nuclear capacity and jointly build two new nuclear power plants on the same site, the V.C. Summer Nuclear Station.

Two and a half weeks ago, on July 18, I toured the construction site with several senators and staff to get an update on the project. During the tour, the project manager told me that they were 70 percent complete. While we were cautioned about what the Westinghouse bankruptcy filing would mean for the project, it seemed after touring the site that surely a solution could be reached to continue.

On July 31, Santee Cooper and SCANA announced their intent to abandon the project.

To add insult to injury, SCANA announced that it would seek a rate hike to cover the approximately $3 billion of abandonment costs. Days later, they announced quarterly profits of $120 million.

The facts surrounding the decision to abandon the nuclear power plants are complicated. They include changes in federal energy policy, the massive failure of Westinghouse to manage project deadlines and construction costs, Toshiba’s refusal to bail out Westinghouse after bankruptcy, and perhaps a failure on SCANA and Santee Cooper’s part to meaningfully address these factors sooner in the process.

What can we change right now? Santee Cooper needs to be dealt with. It is a state-owned asset, and as such, it will have to answer to the General Assembly next legislative session.

SCANA is privately owned, so our options are more limited; however, we can make sure that customers stop bearing the brunt of this project’s failure.

We do this by repealing the 2007 Base Load Review Act.

The General Assembly passed this bill with good intentions and in preparation for a growing energy infrastructure. When it was enacted, legislators did not anticipate five years of construction, $9 billion, and more than 5,100 jobs lost.

Among other things, the legislation essentially allows utilities to pass along estimated project costs to ratepayers prior to construction, should the Public Service Commission (PSC) deem the decision to build the nuclear plant prudent. If a project is abandoned after the prudency determination, then the utility is allowed to defer costs and include them in its next rate case, but it must prove that abandonment was prudent.

Again, while there is a provision for abandonment, no legislator truly considered that we might find ourselves in this situation.

We cannot shift costs to ratepayers in order to finance such a tremendous risk, especially when a state-owned asset is involved and the parties are providing something as essential as power generation. This legislation must be repealed immediately.

Like many of you, I cannot simply sit back and accept our current set of facts. We must demand answers.

More importantly, we need accountability and to make sure that this cannot happen again.

The first step is to repeal the Base Load Review Act. The General Assembly has the ability to reconvene in statewide session between now and January for matters of this magnitude. If we do nothing in the next few weeks and the PSC approves the pending $3 billion rate hike to let SCANA walk away scot-free, then the legislature will be powerless to hold SCANA accountable for their failure.

It is imperative that we carry out the duties you elected us to exercise on your behalf. I urge my colleagues to recognize this opportunity to protect ratepayers going forward. We must act to protect the thousands of South Carolina families that will be adversely affected by this decision.