Hopes for a U.S. nuclear renaissance dimmed Monday when the owner of a partially built power plant in South Carolina pulled the plug after its costs ballooned by billions of dollars.
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The decision by Scana Corp. to abandon the V.C. Summer Nuclear Station came months after reactor builder Westinghouse Electric Co. filed for bankruptcy, in part because of massive cost overruns at the South Carolina nuclear plant and a similar project owned by Southern Co. in Georgia.
The nuclear plants were the only two being built in the U.S., which hasn't seen a new reactor built since the 1980s. Both use a new Westinghouse design intended to be simpler and easier to construct, but they have experienced escalating costs and delays. The move to halt work on the South Carolina project will likely prompt U.S. regulators and utility chiefs to think twice before proposing any more nuclear plants.
The South Carolina power plant was about to get even more expensive. Santee Cooper, a state-owned electric utility that was a minority owner in the plant, provided figures that suggested the final costs to build the facility by 2024 would swell to about $25.7 billion. When first proposed in 2008, it was projected to cost $11.5 billion. Before Monday, most recent projections called for it to cost around $14 billion.
The sharply higher estimate raises questions about how much it would cost to complete the Georgia plant. Jacob Hawkins, a spokesman for Georgia Power, a unit of Southern Co., said the company expects to wrap up a cost-to-complete analysis of the project in August. Once finished, "we will work with the Georgia Public Service Commission to determine the best path forward for Georgia customers," he said.
Unexpected costs related to Westinghouse's first-of-its-kind reactor and required changes to enhance safety caused the price of the projects to rise. In March, Westinghouse filed for bankruptcy amid rising costs associated with both plants, a situation that imperiled its Japanese parent, Toshiba Corp.
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Last week, Toshiba agreed to pay Scana and Santee Cooper $2.17 billion to cover its obligations, after reaching a similar agreement with Southern.
Still, Santee Cooper's board of directors voted early Monday afternoon to stop work on the South Carolina project, which according to regulatory filings is about 35% complete. Shortly afterward, Scana said it would file paperwork to abandon construction, citing rising costs, uncertainty around federal subsidies and Santee Cooper's pullout decision.
"While we respect Santee Cooper's decision, we are extremely disappointed," Westinghouse President and CEO José Emeterio Gutierrez said. "The South Carolina economy is sure to feel the negative impact of losing over 5,000 high-paying, long-term jobs, as well as not having available the reliable, clean, safe and affordable energy these units would provide."
Critics said work at the Georgia plant should stop immediately. "We also call on Georgia Power and their utility partners to protect their customers from the similarly risky, mismanaged project in Georgia at Southern Company's Plant Vogtle," said Stephen Smith, executive director of the Southern Alliance for Clean Energy.
South Carolina Gov. Henry McMaster called for public hearings on the nuclear power plant. "Ratepayers have questions and they deserve to have answers," said his spokesman, Brian Symmes.
State ratepayers have already paid $1.4 billion for the plant, which comes to about 18% of a typical residential bill, said C. Dukes Scott, executive director of the state's Office of Regulatory Staff.
Westinghouse said in papers filed last week in New York bankruptcy court that it had recently completed an updated business plan that it would share with its creditors, including the owners of the nuclear-power plant projects.
The company said its plan lays the groundwork for a reorganization.
It is unclear what will happen to the two half-finished reactors in South Carolina, located about 20 miles northwest of Columbia. There is an existing reactor there that has been operating since 1984. It is expected to remain in service.
--Jonathan Randles contributed to this article.
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(END) Dow Jones Newswires
July 31, 2017 19:08 ET (23:08 GMT)