The final tab for South Carolina’s failed nuclear power project could increase by $421 million after a state audit found the two utilities behind it owe sales tax on the materials they bought for the unfinished plant.
The bill, obtained by The Post and Courier, includes millions of dollars of interest tacked onto a staggering $410 million claim for back taxes. The assessment covers every item that South Carolina Electric & Gas and Santee Cooper bought for the massive construction project — every bolt, pipe and turbine.
SCE&G and Santee Cooper have said they will challenge the findings of the audit. But the assessment stands to pile onto the failed V.C. Summer project’s already-hefty $9 billion tab. Who will pay for the unfinished reactors all has dominated state politics for much of the last year.
The utilities weren’t initially required to pay sales tax on the reactor parts because South Carolina exempts major manufacturers from paying tax on the materials they use to build plants. In the eyes of the state, the V.C. Summer expansion counted as a factory.
But after the power companies called off construction last summer, the S.C. Department of Revenue questioned whether they owed sales tax. At issue is the fact that in SCE&G’s words, “no electricity will be manufactured for sale.”
The audit began at the start of the year after the tax agency revoked the utilities’ sales tax exemption, but the extent of the cost had been unknown until the bill landed at SCE&G earlier this month.
Both utilities have said they plan to appeal the decision.
They’re likely to take different approaches: Santee Cooper spokeswoman Mollie Gore said the state-owned power provider plans to contest the audit separately. Unlike SCE&G, Santee Cooper hasn’t formally abandoned the V.C. Summer project, potentially creating an opening for it to hold off the tax bill.
“We disagree with the basis for the assessment,” Gore said. “We do have multiple defenses, and we’ll be pursuing them.”
SCE&G didn’t respond to questions about the case it would make to the Department of Revenue.
It isn’t clear who would ultimately pay if the appeals aren’t successful. Power companies typically pass on their taxes to customers, meaning ratepayers could be forced to eat the extra cost.
If that happens, it would affect more than half the state’s electricity users — 1.6 million in all, including the state’s electric cooperatives.
A big chunk of those ratepayers’ monthly bills is already financing the project: It eats up nearly a fifth of SCE&G ratepayers' bills and nearly a tenth of Santee Cooper customers' bills. They’re expected to keep paying for decades.