Utility vultures circle the V.C. Summer nuclear carcass

South Carolina faces a chaotic financial and political environment as a result of the entirely predictable collapse of the V.C. Summer nuclear project.

The latest turn in the tangled tale is that a new vulture has appeared circling the carcass of the two failed 1000-MW Westinghouse AP 1000 units, and the operating 966-MW Westinghouse PWR, when went into service in 1984 at a cost, in 2016 dollars, of $3 billion. According to an account in Columbia’s The State newspaper, the latest to show interested in feeding off of South Carolina’s nuclear woes is Florida-based NextEra Energy.

V.C., Summer construction

Virginia-based Dominion Energy already has a $14.6 billion offer on the table for SCANA Corp., 55% owner of the $9 billion nuclear failure. The state-owned Santee Cooper owns the remainder. SCANA also is the majority owner of the operating unit, with Santee Cooper holding a minority share.

SCANA has agreed to Dominion’s offer, but it faces obstacles at the South Carolina Public Service Commission. Dominion wants to continue billing ratepayers some $20/month to recover the failed investment.

I’m hesitant to use the term “ratepayers” in most of what I write about electric utilities, preferring “customers.” But in this case, the ratepayer identification fits. Electricity users in the state likely will be paying rates for something they will not receive.

Dominion CEO Thomas Farrell told the seven state regulators last week that without the provision to recover the sunk costs, the Virginia utility will walk away and SCANA will face imminent bankruptcy. The commission staff is working on an analysis of whether SCANA will really face bankruptcy if the Dominion deal fails.

The South Carolina legislature has also weighed in, reviving two moribund special committees, one in the House and the other in the Senate, to examine the nuclear deal. The solons are uncomfortable with Dominion’s insistence that it must continue charging for the project over the next 20 years. “It’s going to be primarily about that one issue,” Shane Massey, the Republican Senate majority leader, who chairs his chamber’s special nuclear committee, said.

S.C. Gov. McMaster

Republican Gov. Henry McMaster has said he’s considering selling Santee Cooper, originally formed in the 1930s by progressive Democratic Gov. Strom Thurmond on the model of the Roosevelt administration’s Tennessee Valley Authority. McMaster’s threat led Santee Cooper board chairman Leighton Lord to resign.

Moody’s Investors Service has frowned on the Dominion-SCANA deal, changing Dominion’s rating outlook to negative from stable and is pondering credit downgrades for the debt of parent SCANA and its operating utility SCE&G.

Now other birds of prey are appearing. The article in The State said, “An epic battle is unfolding at the S.C. State House and on the airwaves as deep-pocketed power companies fight for a foothold in South Carolina’s volatile energy market. Three dozen lobbyists have been hired by major utilities to be their eyes, ears and advocates at the State House as lawmakers decide what to do about a failed nuclear project that already has cost S.C. power customers more than $2 billion. Included in that number are at least eight lobbyists for a Florida-based utility, NextEra Energy, thought to have its eyes on acquiring the Cayce-based SCANA utility and, possibly, the state-owned Santee Cooper utility as well.”

The Columbia newspaper has also pointed at North Carolina’s Duke Energy as showing some interest in SCANA and Santee Cooper.

Look for a lobbying free-for-all. Senate Majority Leader Massey said, “There’s no question they’re coming. It’s going to be pretty intense. It’s probably going to be the most intensely lobbied issue that I’ve seen. And most of it it’s going to be disingenuous. Everybody’s putting their own spin on it.”

Undoing to Dominion-SCANA deal could be costly, as the arrangement has hefty breakup fees. Dominion would owe SCANA $280 million if it breaks the deal. SCANA would owe Dominion $240 million if the South Carolina utility walks away. It’s uncertain what would happen if the legislature of the PSC turns the deal down. Probably a flurry of lawsuits.

Given the Palmetto State mess, it’s inconceivable to me that any entity in the U.S. (other than the feckless federal government) would try to build a new nuclear power plant.

I would not be surprised if a similar fiasco occurs if the Southern Co.’s Vogtle nuclear project, a fraternal twin of Summer experiencing the same enormous cost overruns and schedule delays, bites the dust.

— Kennedy Maize