COLUMBIA — After weeks of high-stakes hearings, the fate of South Carolina’s failed nuclear project is in regulators’ hands.
The state’s Public Service Commission now has one month to answer two of the biggest questions ever to face South Carolina’s energy sector: Who should pick up the tab for a pair of scuttled reactors, which cost billions? And should the owner of South Carolina Electric & Gas be sold to a Virginia utility giant?
The seven regulators on the commission have heard testimony about the demise of the reactors for the past three weeks. SCE&G has argued that everyone, including regulators, knew the project was risky and facing stiff problems. Its opponents have said the utility hid key reports and sought to deceive regulators.
Depending on whose side regulators take, billions of dollars hang in the balance. SCE&G owned just over half of the $9 billion project, and its customers have already paid more than $2 billion into it.
If regulators take the utility’s side, ratepayers could be on the hook for about $2.3 billion more over the next two decades. That’s a proposal made by Virginia-based Dominion Energy, which is trying to buy SCANA Corp., the owner of SCE&G. Regulators also are weighing whether to approve Dominion's $14.6 billion offer to purchase Cayce-based SCANA, a deal that could be scuttled if nuclear-related payments are cut sharply.
A decade ago, SCE&G and state-run Santee Cooper partnered to add two reactors to the V.C. Summer power plant north of Columbia at a time when nuclear power was seen as a way to provide clean energy to replace polluting coal plants. SCE&G won an agreement with the Legislature to charge its customers for construction costs while the building the reactors.
But the project struggled with cost overruns and construction delays, in part, because no new nuclear plants have been built in the United States in more than a generation. The utilities stopped work in mid-2017 after spending $9 billion on the partially completed project.
The law allowing SCE&G to charge its 700,000 customers for construction, however, did not include any provisions to stop those payments even if the reactors were not completed — a critical part of the hearings now before state utility regulators.
The weeks-long hearings with state regulators capped a year of revelations about plans to expand the plant and what sent a massive construction site toward financial disaster. It was the most detailed accounting yet of the nuclear saga, sifting through bombshell audits, undisclosed budget estimates and whistleblower testimony.
"It's apparent that we were missing a lot of information that we needed, and we’re getting it now," said commission Chairman Randy Randall, responding to criticism of regulators' role in the nuclear project.
He went on to say that the Public Service Commission had followed state law throughout the project, even if that law wasn't popular. He was referring to 2007 legislation that helped finance the reactors, and he said the commission would follow the current law with its decision next month. That's important because state lawmakers earlier this year changed the way utilities are regulated to make it easier to put construction costs on power companies.
The hearings closed Wednesday with one of the nuclear project’s top executives on the stand. Steve Byrne, SCE&G’s former operations chief, sought to downplay the significance of an audit that identified a litany of problems with the project — most of the issues were already known, he said — and an unreleased cost estimate that found it would cost $500 million more than SCE&G admitted publicly. That estimate, he said, was one of many produced.
Regulators asked Byrne point-blank who he’d blame for what he called “an awful outcome.” He pointed a finger only at the project’s contractor, Westinghouse, and declined to assign blame to regulators or SCE&G.
He went on to say that a year before the project went belly-up, he felt good about its prospects — good enough that he turned down a job running a different utility. Internal memos at the time suggested that problems were still dogging the project then, and the project’s owners harbored concerns about the slow pace of progress.
The case will hinge, in part, on whether regulators think they were misled as the project marched on and whether SCE&G followed rules set by a law that lets the utility charge for big power plants before they’re finished.
Regulators aren’t the only ones asking whether SCE&G and its executives followed the law. A federal prosecutor and an FBI agent watched parts of the hearings this month, suggesting that a long-running investigation hasn’t lost steam yet.
For its part, the Public Service Commission won’t have long to make its decision. It only has until Dec. 21 to decide whether the law was followed throughout the nuclear project, and who will pay for it.