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Selling parts from failed South Carolina nuclear project could net $861 million

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VC Summer Jan 31 2018 IMG_3691.jpg (copy)

The abandoned expansion of the V.C. Summer Nuclear Station in late January. A previously undisclosed report found that the nuclear project's owners could squeeze $861 million out of the unfinished reactors by salvaging their equipment. High Flyer/Provided

The owners of South Carolina's failed nuclear project could squeeze hundreds of millions of dollars out of their unfinished reactors by selling them for parts, according to a previously unreleased analysis of their options.

A report written last summer by the national engineering AECOM estimated that parts purchased for the scuttled expansion of the V.C. Summer Nuclear Station would fetch $861 million if they were sold off. The report, commissioned by South Carolina Electric & Gas, noted that sales prices could vary widely.

SCE&G, for its part, says it thinks that estimate is much too generous — potentially to the tune of hundreds of millions of dollars. The power company has walked away from its stake in most of the equipment, saying it's worth more as a tax write-off for abandoning the plant.

AECOM's analysis was conducted as the nuclear project's owners, SCE&G and Santee Cooper, were deciding whether to call off construction on the reactors. The project's budget had spiraled far beyond initial estimates and it was years behind schedule.

AECOM was hired by SCE&G to evaluate its options, from pausing work for a few years to tearing down the reactor buildings altogether. It was meant to help answer a question with enormous consequences to the state: Should the construction on the unfinished reactors be shut down?

The power companies both ultimately decided they should quit, halting construction in July after sinking $9 billion into the Fairfield County ground.

The findings of AECOM's study are marked "highly confidential," and SCE&G sought to limit their spread as recently as November, when the company told state regulators they could view the document only in person at its headquarters just outside Columbia.

The Post and Courier obtained the report from Santee Cooper, a state-owned power provider, under an open records request.

Months after AECOM finished its analysis and the utilities decided to end the V.C. Summer project, the findings descend on a state focused on a new question: What are the reactors going to cost South Carolina's electric ratepayers?

That question has consumed state lawmakers' attention so far this year. SCE&G, the project's majority owner, is charging electric customers $37 million a month for the reactors, about a fifth of their monthly bills. Santee Cooper is expected indirectly to collect billions through customers of the state's electric cooperatives, which buy most of its power.

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Lawmakers are considering a measure that would force SCE&G to stop charging for the project, at least temporarily, though the company has warned it could cause financial distress and a chain reaction of unintended consequences.

SCE&G's parent company, meantime, has agreed to be sold to Dominion Energy in a deal that would slice part of the nuclear surcharge from its rates. Dominion has also offered to refund most of the nearly $2 billion ratepayers have paid so far.

Salvaging the site's parts could cover part of the tab but it wouldn't make ratepayers whole, the AECOM report found. To collect $861 million, the power companies would have to sell off equipment they spent $2.9 billion to buy.

The analysis didn't include the more than 13,000 tons of steel that was sunk into the reactors. The analysis found that demolishing the plant and scrapping the metal would cost far more than it would bring in.

So far, only one plan has emerged to sell parts from the V.C. Summer site.

SCE&G and Santee Cooper are expected to sell some items to Southern Co., a Georgia utility that is building a pair of twin reactors south of Augusta. Southern wants to buy things as small as rebar and as big as the pumps that circulate coolant through nuclear reactors.

SCE&G is keeping an ownership stake in those parts while details are hashed out, spokesman Eric Boomhower said, but it has offered to hand all the rest over to Santee Cooper. SCE&G formally abandoned the reactors late last year in an effort to claim a massive tax write-off that it says will pay down the project's cost.

Santee Cooper says it's still evaluating its options for what to do with the incomplete reactors and the project's equipment. The utility has a "goal of maximizing the benefit of that site and equipment for our customers," spokeswoman Mollie Gore said.

In the meantime, the equipment is mostly sitting on the construction site and in warehouses near Columbia. All told, it fills an area the size of nearly seven football fields, according to the Office of Regulatory Staff, the state's utility watchdog agency.

Reach Thad Moore at 843-937-5703. Follow him on Twitter @thadmoore.

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