MUST CREDIT High Flyer © 2017

Parts of the V.C. Summer Nuclear Station are shown uncovered in October. Utility watchdogs and legislators want the two unfinished reactors to be maintained in case a buyer steps up, but majority owner SCANA Corp. says they're more valuable as a tax write-off. The deduction can't be claimed, it says, if the site is preserved. File/High Flyer/Provided

Lawmakers and utility watchdogs want to button up South Carolina's two unfinished nuclear power plants, keeping the $9 billion investments ready to restart or sell if the project's fortunes improve.

But SCANA Corp., the project's majority owner, doesn't want to maintain the unfinished nuclear reactors at V.C. Summer Nuclear Station. The company says they're worth more rusting away in the Fairfield County soil.

The investor-owned utility is reluctant to upkeep the reactors because the company wants to cash in on federal tax write-offs that could shave billions of dollars off the final price. SCANA's executives say it makes more sense to abandon the reactors altogether than wait for a buyer to emerge.

The financial maneuvering, which SCANA floated this week, could put SCANA at odds with Santee Cooper, its partner on the project. In a letter he wrote Thursday, Santee Cooper chief James Brogdon Jr. vowed to protect the project's "value and viability" by preserving equipment at the site.

The leaders of both South Carolina utilities meet next week to decide whether to maintain the reactors.

Meanwhile, utility watchdogs are urging state regulators to force SCANA to publicly answer questions about what is going on at the site about 30 miles north of Columbia. SCANA agreed to update the state's utility regulators in two weeks.

The Office of Regulatory Staff, the state's utility watchdog, warned state lawmakers and regulators this week that the unfinished reactors aren't covered from the weather and falling debris. Major parts such as pumps and valves are "exposed to the elements," they reported.

"The actions could restrict the ability to restart construction, either in the near or long term, and could increase the costs associated with doing so," Shannon Hudson, an attorney with the utility watchdog agency, told member of the state's Public Service Commission. 

But Cayce-based SCANA now considers the equipment already installed in the reactors to be worth no more than scrap metal.

Speaking to investors Thursday, SCANA executives said they had no interest in paying to keep the reactors ready to be finished. By abandoning the plant and letting it rot away, they say, they can claim a $2 billion tax deduction.

"The choice is really pretty simple — it's $4.2 billion that we have to recover, or get the tax deduction solidified, and it's $2.2 billion," SCANA finance chief Jimmy Addison said. "It's a huge difference."

SCANA's intentions are especially important because of the way the tax code is written, said Lawrence Zelenak, a Duke University law professor who studies corporate taxes. Under the law, he says, the company has to intend to walk away from the plant "irrevocably," with no plans to restart construction or sell it off.

And while it's not uncommon for companies to take the deduction, Zelenak says there's little precedent for a project this big to be claimed as a tax write-off.

"I think they're right. If they mothball it, in all likelihood, they would not be able to claim that deduction," Zelenak said. "It's a real problem."

Santee Cooper, meantime, wants to maintain the reactors. The Moncks Corner-based utility says it hired a contractor to preserve the facility for a year, starting next month. SCANA is involved in that work, Santee Cooper spokeswoman Mollie Gore said.

But it's not clear how long both power companies will be involved. In a letter to Santee Cooper's largest customer, Brogdon said the two utilities would meet next week "to determine the willingness, responsibility and commitment to preventative maintenance of the owners going forward."

"The extent of the role that SCE&G is willing to undertake in site preservation is not known at this time," Brogdon added.

SCANA's tax plans roiled state Sen. Mike Fanning. The Great Falls Democrat met with Gov. Henry McMaster and other senators this week to see if the state could ensure the pipes, pumps and equipment at the plant were maintained. 

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Fanning, whose district includes the reactors, said SCANA's plan to let the reactors deteriorate was the most infuriating thing he has heard since the project was canceled in July and nearly 6,000 employees lost their jobs. 

"This is the biggest fiasco we have seen in the history of South Carolina," Fanning said. "They want to ensure that the state of South Carolina and their customers get nothing back for their investment."

Push back against the abandonment plan would add a new layer of uncertainty to SCANA's financial future. Legislators are already considering changes to South Carolina's utility regulations, and the nuclear project is the subject of a raft of lawsuits and at least three state and federal investigations.

Regulators are also considering whether SCE&G customers should continue paying $37 million a month toward the project, a decision worth billions of dollars to the company. Some 18 percent of customers' power bills are earmarked for the reactors.

Kevin Marsh, the CEO of SCANA, says the company is trying to negotiate a settlement over how much customers have to pay. Marsh wouldn't say who he was talking with, but he told Wall Street analysts that the discussions were still "preliminary" and "conceptual."  

"I'm optimistic to the fact that people are talking to us," Marsh said.

To land a deal, he added, the company will likely need lawmakers to sign on. That prospect, however, isn't a sure bet.

State Rep. Russell Ott, a St. Matthews Democrat who's helping lead a special panel investigating the project, said many lawmakers aren't eager to cut a deal with SCANA after it kept a critical audit private for more than a year.

“They have forfeited their ability to negotiate at this point," Ott said.

Andrew Brown of The Post and Courier contributed to this report. Reach Thad Moore at 843-937-5703. Follow him on Twitter @thadmoore.