BRADENTON, Fla. – Two environmental groups called on regulators to halt work on nuclear reactors in South Carolina, contending that ratepayers face the brunt of problems associated with the “bungled” project.

Friends of the Earth and the Sierra Club said Tuesday that they hope to prove that two nuclear units being built by public and private power agencies at the V.C. Summer Plant should be abandoned.

A crane places the final containment ring on a new nuclear reactor at South Carolina’s V.C. Summer plant on June 9.
A crane places the final containment ring on a new nuclear reactor at South Carolina’s V.C. Summer plant on June 9. SCE&G

They have filed a complaint with the South Carolina Public Service Commission. A hearing is scheduled for Oct. 2.

“It can become a catastrophic mistake if we don’t stop now,” said Mark Cooper, a senior research fellow for economic analysis at the Institute for Energy and the Environment at the Vermont Law School. South Carolina entities involved with the project and regulators should admit that the nuclear project is a failure, said Cooper, a consultant for the environmental groups.

Ratepayers, the groups said, should receive refunds for money they’ve paid toward the project through increases in their electric bills “due to the imprudence on the part of South Carolina Electric & Gas,” the lead utility company for the project.

SCANA Corp. subsidiary SCE&G and the state-owned South Carolina Public Service Authority’s Santee Cooper have been assessing the viability of the project since its prime contractor, Westinghouse Electric Co., filed for bankruptcy on March 29.

SCE&G owns 55% of the two new reactors at V.C. Summer, while Santee Cooper owns a 45% stake.

Both AP1000 reactors are based on a new design created by Westinghouse, a company owned by Japan's Toshiba.

Since Westinghouse filed for reorganization, SCE&G has not released a construction schedule or cost estimate for the project, said Friends of the Earth senior advisor Tom Clements, in Columbia, S.C.

The total cost of the project could be headed for $20 billion or more, he said, setting the stage for ratepayers to be “slammed” with more rate hikes.

“Regulators and decision makers here do not want to say a word about the mess with the nuclear project, leaving Friends of the Earth and the Sierra Club as pretty much the only voices speaking up and asking questions in the public interest,” he told The Bond Buyer in an email. “We requested and were granted a hearing before the SCPSC to help get to the bottom of things.”

When asked to comment on the environmentalists’ claims and the complaint filed with regulators, Santee Cooper spokeswoman Mollie Gore said the state-owned utility is not regulated by the PSC.

“Our evaluation of the project is ongoing,” she said Tuesday.

Although Santee Cooper is not regulated by the SCPSC, the public utility could encounter collateral damage if state regulators order South Carolina Electric & Gas to halt work on the project.

Santee Cooper has issued $4.2 billion of municipal bonds toward its share of the new units at V.C. Summer.

In 2016, the total cost estimate of the project for SCE&G was $7.66 billion, while the cost for Santee Cooper was projected to be $6.2 billion, according to Wells Fargo Senior Analyst Randy Gerardes.

In a quarterly report to the Public Service Commission on May 5, SCE&G said Westinghouse provided a revised estimate of the cost to complete the units that would be approximately $829 million more than the cost that Westinghouse would have been entitled to charge as the prime contractor.

SCE&G said it had not yet validated the cost estimate, and that it anticipated completing an evaluation of whether or not to complete one or both units during the second quarter of 2017.

The investor-owned utility, which has released statements about the project on behalf of itself and Santee Cooper, has been conducting an assessment of costs since Westinghouse filed for bankruptcy.

V.C. Summer owners have foot the bill for subcontractors to remain on the job at a cost of about $120 million a month.

SCE&G said there are approximately 5,250 workers on site daily, a majority of them South Carolina residents.

Friends of the Earth and the Sierra Club said in their June 22 complaint filed with the PSC that they believe inevitable construction schedule delays and the capital cost schedule increases facing the project are “material and adverse deviations” from the PSC-approved schedules that the utility failed to anticipate or avoid.

“Sierra Club is informed and believes that SCE&G intends to incur material additional capital costs and schedule delays without first seeking commission approval,” the complaint said.

The complaint said it has been eight years since the PSC first approved the project in 2009, and there’s still no final cost estimate and no construction schedule.

Construction on the reactors is 34.3% complete, according to SCE&G’s May 4 quarterly report. Engineering work is 96% complete, while 88.2% of the procurement has been done.

The environmental groups said SCE&G ratepayers pay the highest residential electric bills in the country for customers of comparable investor-owned utilities, with the exceptions of four small and remote island utilities serving Nantucket and Maui.

Residents in Georgia pay an average of $127.39 per month and North Carolina residents pay $127.02, while SCE&G customers pay $160.61 per month on average, they said, citing 2015 U.S. Department of Energy data.

“Of our bills here, some 18% or $27.00 per month already pays the financing costs of this failing nuclear project,” the complaint said. “Absent commission remedial action requested here such rates will be unjust and unreasonable” and contrary to South Carolina’s code.

The groups want the PSC to direct the utilities to immediately stop spending money on capital costs; to determine if SCE&G’s actions have been proper; to review whether the project should be abandoned; to determine replacement renewable energy alternatives to meet energy needs; and to provide reparations to ratepayers.

SCE&G’s response to the complaint is due Sept. 5.

“Ratepayers need relief,” said Robert Guild, an attorney for Friends of the Earth and the Sierra Club of South Carolina. The PSC “needs to mandate aggressive measures.”

In Georgia, where public and private power agencies are also building two Westinghouse AP1000 reactors, questions have risen about surcharges customers pay there for the new construction at Plant Vogtle.

The owners, which include Georgia Power Co. and the Municipal Electric Authority of Georgia, are close to taking over the completion of their project. MEAG has issued $2.92 billion of bonds for its 22.7% ownership share of the two new units.

On June 9, the owners negotiated a binding services agreement that will allow Westinghouse to reject its contract at Plant Vogtle.

The agreement also provides for the transition of construction management on the two new reactors there to Southern Nuclear Operating Co., a Birmingham, Ala.-based affiliate of Southern Co.

The pact includes a settlement in which Toshiba will honor a $3.68 billion financial guarantee of the costs.

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