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Report Calls for Abandoning Bungled Nuclear Project in South Carolina

Posted Jul. 18, 2017 / Posted by: Patrick Davis

COLUMBIA, S.C. – An in-depth economic analysis released today documents that a problem-plagued nuclear reactor construction project in South Carolina must be abandoned. The report concludes that money imprudently spent on the project must be returned to customers and that the project’s cancellation and pursuit of cleaner alternatives could save customers billions of dollars.

The report, the basis for expert testimony to be filed with the South Carolina Public Service Commission (PSC), documents how planning by South Carolina Electric & Gas (SCE&G) for the reactors was based on faulty predictions of electricity need and that lower-cost, cleaner alternatives such as energy efficiency, conservation, solar, wind and more effective system management must now be deployed.

The report, entitled The Failure of the Nuclear Gamble in South Carolina, commissioned by Friends of the Earth and the Sierra Club, was prepared by Dr. Mark Cooper, Senior Fellow for Economic Analysis at the Institute for Energy and the Environment at the Vermont Law School. Dr. Cooper holds a Ph.D. from Yale University and is a former Yale University and Fulbright Fellow and a recipient of the Esther Peterson Award for Consumer Service. He has published seven books and hundreds of articles and papers on energy, high technology, telecommunications and media.

The report aims to stimulate public discussion about the bungled project and how imprudent decisions led to the continuation of the project long after it should have been terminated. Dr. Cooper concludes that “Regulators can save consumers billions of dollars by pulling the plug on Summer 2 & 3, already years behind schedule and billions over budget.” He goes on to warn that “Cost overruns and delays are likely to get much worse if the project continues.”

The fate of troubled twin-unit V.C Summer reactor project under construction by SCE&G and the South Carolina Public Service Authority (Santee Cooper) is in doubt as the project is years behind schedule and billions of dollars over earlier cost estimates.

In the report, Dr. Cooper addresses key questions, including “Would ratepayers be better off if the utility abandoned the plant and met the need for electricity in the least-cost manner possible?” Dr. Cooper, who called for project abandonment in 2012 in testimony before the PSC, affirms “The answer is, as it was five years ago, unequivocally yes.”

The project was authorized in 2009 by the South Carolina Public Service Commission (PSC) and public interest groups warned at the time that it would face massive cost overruns, schedule delays and construction problems. The dire predictions have come true and decision makers in South Carolina are seeking to avoid responsibility for the failing project, according to the environmental groups. The demise of the project, along with an equally troubled parallel project at Georgia Power’s Vogtle site, has led to an abrupt end to what was once touted as a “nuclear renaissance” in the United States.

To complicate matters, Westinghouse, vendor of the AP1000 reactors under construction, declared bankruptcy in March and negotiations over financial restitution languish in bankruptcy court. Already, $9 billion has been sunk into the mismanaged project but construction is only 37% complete, leading to estimates of over $20 billion if the project were to be completed.

Dr. Cooper outlines that “the severity of the economic collapse of the project is testimony to the enormity of the mistake made in choosing to build two, new, untested nuclear reactors that were too big (unnecessary to meet the need for electricity) and far too costly for the utility to undertake (nine times the recommended size of a prudent investment for a small utility).” His analysis lays blame for the current state of affairs with a state law - the Baseload Review Act - that abandoned market principles and forced rate payers to assume cost and risk in advance for a “losing technology.”

The report “estimates the magnitude of the cost to complete the construction of Summer 2 & 3 and outlines steps to diminish and mitigate the harm of excessive costs, beginning with the abandonment of the project.” The report concludes that the waste of money on the project must cease and that there must be “claw back for improperly expended sunk costs.” Dr. Cooper states “Swift action by the Commission could save SCE&G ratepayers as much as $10 billion.”

In order to stimulate a public discussion and sort out the fate of the mismanaged project, Friends of the Earth and the Sierra Club filed a complaint with the PSC on June 22. The groups called for a halt of $120 million per month in unauthorized spending and requested a hearing on the matters at hand. A formal hearing on the groups’ complaint has been set for October 2. Dr. Cooper will serve as expert witness and filing of his testimony with the PSC is due on August 15.

Other Documents:
Complaint filed on June 22, 2017 by Friends of the Earth and the Sierra Club with South Carolina Public Service Commission, linked under “matters” in Docket 2017-207-E, linked here: https://dms.psc.sc.gov/Web/dockets/Detail/116365
 
Expert Contacts: Tom Clements, (803) 240-7268, tomclementssc@gmail.com
Robert Guild, (803) 917-5738, bguild@mindspring.com
Communications Contact: Patrick Davis, (202) 222-0744, pdavis@foe.org
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