Utilities ditch reactors that launched U.S. nuclear renaissance

COLUMBIA, S.C. (Reuters) - South Carolina utilities said on Monday they are abandoning two unfinished reactors that were once hailed as the start of a U.S. nuclear power renaissance before they were dogged by billions of dollars in cost overruns.

Workers pour the basebment for the Unit 3 reactor under construction at the V.C. Summer site near Columbia, South Carolina, in this November 4, 2013 handout photo. REUTERS/Nuclear Regulatory Commission/Handout

The reactors were proposed a decade ago when U.S. policymakers expected more than a dozen new nuclear power plants to provide carbon-free electricity. In the years since, however, a shale revolution unleashed a glut of cheaper natural gas, the Fukushima accident in Japan raised fresh safety concerns and the Trump administration is now unwinding steps aimed at countering climate change.

A unit of SCANA Corp and state-owned Santee Cooper said on Monday they would abandon the twin-reactor project known as V.C. Summer. It is less than 40 percent complete, and more than $9 billion had been spent on construction.

“We arrived at this very difficult but necessary decision following months of evaluating the project from all perspectives to determine the most prudent path forward,” said SCANA Chief Executive Officer Kevin Marsh in a statement.

The project was expected to begin producing power last year but has been plagued by construction problems, disputes with regulators and poor quality work.

The utilities blamed the bankruptcy of project’s contractor, Toshiba Corp’s Westinghouse Electric Co, which said in March it could not afford to finish the fixed-price contract for V.C. Summer or a similar project in Georgia known as Vogtle.

A presentation to the Santee Cooper board showed that in the wake of Westinghouse’s bankruptcy the project would likely not be completed before 2023 and would go 75 percent over the initial budget, to as much as $24 billion.

The Georgia project, led by a unit of Southern Co, is now the only new U.S. reactor under construction since the Three Mile Island accident in 1979. Westinghouse landed the contracts by touting its AP1000 design as safer, as well as cheaper and quicker to construct.

Halting V.C. Summer increases the likelihood Southern Co will abandon the Vogtle project, adding to a long list of nuclear power plants canceled after construction began.

It would also be a blow to Westinghouse as it is trying to find a buyer to rescue the company from its financial crisis.

“The collapse of the Summer project should be a cautionary tale,” said Edwin Lyman, a senior scientist with the Global Security Program at the Union of Concerned Scientists in Washington. He said new designs will still require billions of dollars to ensure they meet strict safety standards.

“Unless the nuclear industry acknowledges that there are no shortcuts to development of new nuclear power technology, it will be doomed to repeat this failure,” he said.

Nuclear power plants around the country are struggling to compete with power from cheap natural gas. Santee Cooper’s Chief Executive Officer Lonnie Carter urged the U.S. government to invest in energy and noted that the country could be caught off guard if sluggish electricity demand began to rise again.

“What if everybody starts plugging in electric vehicles?” he asked, as Tesla Inc began its roll-out of much-anticipated Model 3 electric vehicle.

Shares of SCANA were up 4.44 percent on Monday. The stock is down about 14 percent this year.

Shares of Southern Co were up 0.6 percent.

SCANA and Santee Cooper may have to defend against attempts to claw back some of the rate increases used to finance the abandoned reactors.

SCE&G has implemented nine rate increases to customers to pay for V.C. Summer plant. Santee Cooper rate payers have had five rate increases and two more are pending approval.

Additional reporting by Scott DiSavino in New York