Santee Cooper may finally be able to recover some of the money it dumped into two unfinished nuclear reactors in South Carolina.
The board of the Moncks Corner power provider finalized a settlement this weekend with Westinghouse Electric that will enable the state-run utility to sell off leftover parts and materials from the failed expansion of the V.C. Summer project.
The settlement, which has been in the works for months, requires Santee Cooper and Westinghouse to split the profits from any remaining equipment that could be used on another site.
The two companies will evenly split the profits on the most expensive components that are still being warehoused at the V.C. Summer Nuclear Station, but Santee Cooper will get 90 percent of the profits on the other major components that were already welded, bolted or cemented into place.
The proceeds from any remaining nuclear equipment will also be divided up, with Santee Cooper getting 67 percent and Westinghouse netting the rest.
Meanwhile, Santee Cooper will keep all of the profits from the non-nuclear parts and material being stored on the property.
The settlement is being presented as a win for Santee Cooper, which has spent more than a year fighting with Westinghouse over who owns the leftover material in Fairfield County.
“Finalizing this agreement is a tremendous milestone, because it means Santee Cooper can move quickly to sell thousands of pieces of equipment ourselves, as well as support Westinghouse’s efforts to sell the nuclear equipment,” said Mark Bonsall, Santee Cooper's president and CEO.
Santee Cooper previously argued that Westinghouse, the designer and primary contractor for the failed nuclear project, had no right to the equipment abandoned at the construction site. The leaders of the state-run utility pointed out that they had already paid Westinghouse for the equipment during construction.
Santee Cooper relented that point earlier this year after Westinghouse argued it retained the intellectual property rights to the most expensive nuclear equipment.
Westinghouse did not respond to a message seeking comment about the finalized settlement.
Over the past three years, Santee Cooper paid to warehouse and maintain the leftover nuclear components in the hopes the material would help pay off some of its outstanding debt for the project.
The state-run utility still has more than $3.6 billion in bonds tied to construction at V.C. Summer, and Santee Cooper's leadership said any proceeds from the nuclear equipment will go toward paying down that debt.
That will help the state-run utility as it seeks to hold down rates for its power customers, which includes roughly 189,000 direct ratepayers and the state's 19 electric cooperatives.
“We are already planning next steps, and Santee Cooper’s proceeds from equipment sales will be used to shore up our rate freeze and contribute to our long-term plan to retire debt," Bonsall said Monday.
The V.C. Summer project is widely considered one of the worst business failures in South Carolina history.
Santee Cooper was the minority owner of the project. It partnered on the unfinished reactors with Cayce-based South Carolina Electric & Gas, which was sold to Dominion Energy after construction was halted in mid-2017 after years of delays and cost overruns.
The two South Carolina utilities spent more than $9 billion on construction before the reactors were abandoned in July 2017.
By that time, Westinghouse had filed for bankruptcy and left the struggling project in the laps of SCE&G and Santee Cooper. As a result, electric customers for both utilities are still paying off debt tied to the abandoned project.
The amount of material left over from the two unfinished nuclear reactors is vast, and there's one big reason for that. By the time SCE&G and Santee Cooper pulled the plug on the project, they had already purchased more than 90 percent of the parts. Yet only a third of the reactors were actually built.
It's to be seen how much Santee Cooper and Westinghouse might be able make off the parts. Santee Cooper's leaders previously estimated last year that the equipment could net about $425 million.
It will now be up to Westinghouse to market the nuclear equipment, according to the deal. The company will have up to five years to find buyers for the highly specialized parts.