Santee Cooper’s agreement to make a deal with Westinghouse Electric Co. to sell mothballed V.C. Summer reactor components and leftover construction materials was welcome news. Those parts could net the state-owned utility about $425 million, lightening its multibillion-dollar debt as legislators decide whether to sell it, hand it to a third-party operator or hang onto it.
Without the cooperation of Westinghouse, which owns the intellectual property rights to the AP1000 reactor components, Santee Cooper would be unable to certify for resale any of the high-dollar parts, such as steam generators, turbines and water pumps.
Yes, it looks like a raw deal for Santee Cooper in some respects, though the junior partner in the reactor project did inherit the parts free-and-clear when SCE&G parent company SCANA relinquished its stake in the project and then was bought up by Dominion Energy.
But Santee Cooper’s resolution to split proceeds with Westinghouse heads off litigation that could drag on for years. The agreement also increases Santee Cooper’s viability as a standalone public asset and relieves some pressure to raise its electricity rates. (It also would be a bonus to NextEra, if the Legislature ultimately decides to sell the utility.)
Santee Cooper has been paying about $3 million per year to preserve and store major reactor components. That’s a cost Westinghouse should share pending the sale of the parts, considering the restructured company will have a shot at selling the same components twice.
Perhaps most significantly, the Santee Cooper-Westinghouse agreement underscores what a poor job SCANA did of managing the too-big-to-fail project (at least until it did actually fail) and how lacking Santee Cooper was in its public responsibility to protect ratepayers.
Under the pending deal, proceeds from uninstalled nuclear components would be split evenly; Santee Cooper would get 90% of the sale of installed nuclear parts and two-thirds of proceeds from safety equipment. And Santee Cooper would retain sole ownership of the rest of the on-site materials and equipment.
In 2017, Toshiba Corp., the former owner of Westinghouse Electric, agreed to pay $2.17 billion to Santee Cooper and SCE&G as part of a contract guarantee after Westinghouse filed for bankruptcy and the Fairfield County reactor project collapsed.
The latest Santee Cooper-Westinghouse agreement won’t make the state-owned utility whole by a long shot, but the agreement is better than nothing, which was the worst-case scenario here. Simply put, it’s not easy to find a buyer for AP1000 reactor components.
The only other same-model reactors being built in the United States are in Georgia, and they’re largely completed. Those two units are expected to start generating electricity next year and in 2022.
Meanwhile, in South Carolina, no money can change hands until a parts deal is finalized. So lawyers need to draw up the papers and get them signed. And Westinghouse needs to seek buyers for the major components, likely overseas.