081017 Utilities: Amid reactor turmoil, Santee Cooper cancels rate hearing
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Utilities: Amid reactor turmoil, Santee Cooper cancels rate hearing

Nikki Best
Coastal Observer

State lawmakers say it is too early to know how the decision to pull the plug on construction of two nuclear plants will impact future rates or the status of the state-owned utility that supplies power to Georgetown County customers.

“I would like for everyone to know up front there is no magic bullet for this problem,” state Sen. Stephen Goldfinch said.

He was named this week to a committee to review why the project failed.

On Friday, Santee Cooper’s board voted to cancel rate increases due to take effect over the next two years. They were driven in part by cost overruns for the nuclear project. A rate hearing scheduled Aug. 15 at the Waccamaw Library has been canceled.

Santee Cooper and SCE&G announced late last month they would cease construction of two new nuclear power units in Jenkinsville.

The utilities stopped the project after determining the $14 billion cost estimated by contractor Westinghouse was incorrect. Analyses placed the cost of the project at more than $21 billion. Westinghouse filed for bankruptcy in March.

V.C. Summer Units 2 and 3 were planned in 2008 and construction began in 2012. A reactor was placed in Summer Unit 2 in Aug. 2016, but the unit is unfinished and not operational. Unit 1 was completed in 1983 and Santee Cooper has a third ownership in it. SCE&G is the majority shareholder on all the nuclear sites. Had construction on Units 2 and 3 not been abandoned, the state-owned utility would hold 45 percent interest in them. Santee Cooper estimates it will save $6.7 billion by canceling the project. “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,” said Leighton Lord, Santee Cooper board chairman in a press release.

Last week, a bipartisan call from S.C. Senate leaders requested President Pro Tempore Hugh Leatherman reconvene the General Assembly to “consider a joint resolution halting new action on the V.C. Summer Project until the legislature has a chance to act during the 2018 session.”

“As the Republican and Democratic Leaders of the Senate, we and the members of the caucuses are greatly concerned by the announcement earlier this week by SCANA and Santee Cooper that the V.C. Summer Nuclear Station project would be abandoned,” the letter stated.

Leatherman responded on Tuesday by appointing Sen. Nikki Setzler, the minority leader, and Sen. Shane Massey, the majority leader co-chairmen of a V.C. Summer Nuclear Project Review Committee. “The decision to abandon the project leaves South Carolinians strapped with paying for new facilities that will never provide electricity to their homes or businesses,” Leatherman wrote. “Since SCE&G and Santee Cooper generate the household electricity consumed by a majority of South Carolinians, the negative impact of this failed project will touch nearly every home in our state, particularly those in Fairfield County.”

The committee, which includes Goldfinch, is charged with reviewing all facets regarding the failed nuclear project. “With broad authority” the senate will review the chain of decisions made by the power companies, governmental actions like the Base Load Review Act of 2007, and contracts and bonds of Westinghouse and its parent company Toshiba Corp.

The parent company “has contractually agreed to pay Santee Cooper $976 million in settlement beginning later this year and continuing through 2022. Santee Cooper will use these funds to avoid new debt and stabilize rates, to directly benefit customers.”

Goldfinch said the tough decisions ahead of the legislature will not make anyone happy. “Our entire energy policy needs to be reviewed,” he said. Someone is going to have to pay the bills and through its examination of the evidence, Goldfinch knows a conclusion can be made. “Somebody is going to bear the risk, somebody is going to pay for the risk,” he said. “Should it be the shareholders? Rate payers? There is no winner in this game.”

The goal is for the committee to recommend legislative changes that would better protect S.C. electric customers. “Jumping to conclusions this early would be a colossal failure on this behalf,” Goldfinch said. The schedule for committee meetings hasn’t been established yet, but there have been many calls made to the senators to arrange their availability. “I can’t imagine another 10-14 days would go by without meeting,” he said.

Gov. Henry McMaster is reportedly considering selling state-owned Santee Cooper as a way to cover some of the cost from the fallout from the project. Mark Sanford considered selling the utility in 2003 when he was governor.

Goldfinch opposes selling the utility. “We’d wind back up in the situation where people don’t have a choice in their power companies. I’m not sure that benefits South Carolinians.” He fears if the company is sold, it will create a utility monopoly in the state. “One of the things we have to be careful about is something we are absolutely guilty of, we have a tendency to privatize success and socialize failure. I think that’s a dangerous policy for us.”

In addition to a Senate committee, the state House this week created the House Utility Ratepayer Protection Committee. “Each member selected to serve on this committee has been affected by the V.C. Summer suspension and is committed to finding solutions that better protect South Carolina ratepayers,” House Speaker Jay Lucas said in a statement. The committee will begin meeting over the next few weeks. “Upon conclusion of its study and if a viable solution requires General Assembly action, Speaker Lucas will call the House back into session before it is set to reconvene in January,” said the statement from the speaker’s office.

State Rep. Lee Hewitt was not appointed to the House committee, but was cautiously optimistic about the General Assembly’s work. “What I hope is what the Senate and House are doing is not making a knee jerk reaction. Let’s stop and let’s study what happened. And let’s be diligent about moving forward,” he said.

Hewitt wasn’t interested in dwelling on what role the state government may have played in catalyzing the nuclear project. A lot of things went wrong, he said. “At the time the decision was made, they felt it was the best decision at the time,” he said. “If everybody had a crystal ball, they may have made different decisions.”

There were no meetings scheduled for the house committee as of Wednesday evening.

About a month prior to announcing the end of the nuclear project, Santee Cooper notified customers of a rate increase to cover “costs associated with nuclear construction.” That included a 3.7 percent proposed rate increase for 2018, and an additional 3.9 percent in 2019.

In canceling the rate increase and hearings, Santee Cooper announced Friday that it will schedule meetings with customers to discuss the impact of ending the nuclear plant project.

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