Duke Energy customers could pay for S.C. nuclear plant even if it’s not built
Duke Energy has the authority to seek recovery of tens of millions of dollars from South Carolina customers for money it has already spent on a proposed nuclear plant near Gaffney, whether or not the plant is ever built.
The authority rests under the same 2007 state law that has left South Carolina Electric and Gas ratepayers to foot the bill for the failed VC Summer Nuclear Station near Jenkinsville north of Columbia.
Duke is working with the same bankrupt company that was building the VC Summer reactors.
Duke Energy has not said whether it will seek to charge customers to recover a portion of the nearly $542 million it has spent so far to purchase land, perform engineering and seek approval from regulators to build W.S. Lee III Nuclear Station near Gaffney in Cherokee County.
In 2007, the state Legislature easily passed the Base Load Review Act and gave electrical utilities the ability to charge customers for money spent on construction costs for large-scale projects. That law also gives utilities the ability to ask for customers to pay for pre-construction costs for large projects like nuclear stations even if the project is never built. Utilities said charging customers upfront would save interest and lower the project cost in the long run.
Duke Energy could seek to recover from customers nearly $232 million of the $542 million it has spent on Lee Nuclear Station as of June 30, according to its project development report filed with the North Carolina Utilities Commission. Of that, the company could ask the South Carolina Public Service Commission to allow it to tack on a portion of those costs, anywhere from 25 to 30 percent, onto the bills of its South Carolina customers, according to the South Carolina Office of Regulatory Staff, the state office charged with looking out for the public’s interest in utilities cases.
That would put Duke’s South Carolina ratepayers on the hook for $58 million to $69.6 million in costs sunk into the project thus far.
Customers in North Carolina may also have to pay under a similar law also passed there in 2007.
Duke has not made any requests to the Public Service Commission for any rate increases tied to the project, said Dukes Scott, ORS director.
Duke could ask for those costs to be added to bills as part of a general rate increase, Scott said. It would be up to the Public Service Commission to decide whether Duke has been prudent with the money it has spent on the project, Scott said.
Duke has not decided if it will build the Lee Nuclear Station but it did receive its combined construction and operating licenses from the federal Nuclear Regulatory Commission in late 2016, said Ryan Mosier, Duke Energy spokesman.
Whether Duke decides to build nuclear plants in the future depends in part on its cost recovery options, he said.
“Our decision on whether to build new generation in the future will be based on what is in the best interest of our customers, and on factors such as energy needs, project costs, environmental regulations, feasibility, natural gas prices, existing or future legislative provision for cost recovery and more,” Mosier said.
He said Duke is following the developments this week at V.C. Summer and will gauge any impacts to the company’s future generation plans.
VC Summer fallout
On Monday, state-owned utility Santee Cooper and its partner in the VC Summer project, SCE&G, decided to abandon construction of two nuclear reactor units at VC Summer three months after Westinghouse, the company contracted to build the units, filed for chapter 11 bankruptcy due to ballooning losses on its nuclear projects at Summer and Plant Vogtle in Augusta, Ga.
Summer was years behind schedule and its units wouldn’t have been completed until 2022 and 2024. Initial costs for the project were estimated at $9.8 billion but have risen to at least $13.87 billion and could go much higher, utility officials have said.
SCE&G customers have largely borne the cost of delays and overruns.
SCE&G had been approved for nine rate increases for the project since its inception. Now nearly 20 percent of their customers’ bills are dedicated to the project. The company may seek to recover up to $4.9 billion from customers to pay to decommission the project, though the company has said it would use $2.2 billion from a settlement with Westinghouse’s parent company, Toshiba, to defray costs from customers.
Still, customers may end up paying for the failed project for the next 60 years after Kevin Marsh, CEO of SCANA, which owns SCE&G, briefed the Public Service Commission this week that it would need to recoup $2 billion in sunk costs from the project.
Lawmakers this week called for investigations into how the project failed and called for reforms of the Base Load Review Act and regulation agency.
A Public Utilities Review Committee will meet Aug. 23 to review the project and the Office of Regulatory Staff is reviewing the Public Service Commission’s decisions on the project.
On Friday, Senate Majority Leader Shane Massey, R-Edgefield, and Senate Minority Leader Nikki Seltzer, D-Lexington, asked President Pro Tempore Hugh Leatherman, R-Florence, to convene a special session of the General Assembly to issue a joint resolution to halt any VC Summer action until the Legislature can act during the 2018 session.