It would have cost $4.7 billion more to complete SC reactors, regulators say

It would have cost $4.7 billion more to complete SC reactors, regulators say

The State
December 5, 2017

By SAMMY FRETWELL

It would have cost at least $4.7 billion more to complete construction of the two nuclear reactors at the V.C. Summer Nuclear Station, according to a review of a once-secret engineering report by state regulators.

That revised price tag was submitted to the Fairfield County project’s main contractor nine months before the partners in that effort — the Cayce-based SCANA utility and state-owned Santee Cooper utility — abandoned it.

The S.C. Office of Regulatory Staff said the report, written by the Fluor Corp., shows multiple examples of higher costs to finish construction than Westinghouse, the project’s main contractor, had anticipated.

In one instance, Fluor said it would cost $17 million more than Westinghouse had anticipated to do welding, the regulatory agency said. In another case, a heating and cooling system would have cost another $17 million more than Westinghouse expected, according to the report.

Fluor, a national engineering firm, conducted the report for Westinghouse to determine how much more it would take to finish the flagging nuclear project. Westinghouse ran into an array of difficulties with the project, eventually filing for bankruptcy protection in March. Fluor had been hired to take over the project.

The two utilities quit the project July 31 after together spending $9 billion and a decade on the effort. When they walked away, 5,000 workers lost their jobs. The abandonment also enraged customers of the utilities, who already had paid more than $2 billion for the project through higher utility rates.

State officials and a small business group said Monday they would have liked to have had the information contained in the Fluor report long before now.

Nanette Edwards, deputy director at the Office of Regulatory Staff, said the Fluor report would have helped her agency work on an 2016 agreement to freeze the cost of the V.C. Summer project. That agreement froze the project’s costs to about $7.5 billion for customers of SCE&G, a SCANA subsidiary. A number of groups signed off on the agreement, approved in late November 2016, about a month after the date on the Fluor report.

“This report would have been insightful and helpful for us in that time frame of October 2016,” Edwards said, declining to speculate how the report would have changed the settlement agreement.

SCE&G and Santee Cooper say they didn’t know about the Fluor report until after Westinghouse filed for bankruptcy, five months later.

However, Frank Knapp, who heads the S.C. Small Business Chamber of Commerce, questioned why Westinghouse would not have told SCE&G about the report.

“What obligation did Westinghouse have, with this information from Fluor? To pick up the phone and call SCE&G,” Knapp said, adding the report could have influenced the cost-freezing agreement.

Westinghouse spokeswoman Sarah Cassella did not respond to requests for comment, and Fluor spokesman Brian Mershon declined to discuss the report that his company wrote.

When first unveiled about a decade ago, the original cost of the twin-reactor nuclear construction project was expected to be about $11 billion. But in the months before the utilities abandoned the project, reports indicated the price tag had almost doubled.

When Santee Cooper quit the project, it said its costs had risen to $11.4 billion.

The Fluor report, which surfaced last week, cited an array of problems at the site.

Fluor said the project was plagued by delays in getting equipment to the Fairfield County site to do construction work, as well as a shortage of experienced nuclear workers. The project’s construction schedule also was too ambitious, Fluor said.

The study is the second major assessment by an engineering company to find problems at the site. The other report, by the Bechtel Corp., found a litany of problems, as well.

The state Office of Regulatory Staff has analyzed financial details in the Fluor report since The State newspaper obtained a copy of the document last week. Among those details are side-by-side comparisons between Fluor’s estimates to complete the reactors and Westinghouse’s estimates.

Among the differences:

▪ Westinghouse said welding services would cost $500,000. Fluor said they would cost $17.6 million.

▪ Westinghouse said it would cost $3.6 million for heat-and-air-conditioning system insulation. Fluor said it would cost $20 million.

▪ Westinghouse said it would cost $1.17 million to remove and replace the siding and columns of a building. Fluor said it would cost about $4 million.

State regulators said last week they were unaware of the report’s existence until asked by The State whether SCE&G should have disclosed it.

SCANA spokesman Eric Boomhower said his company received a copy of the report in March 2017 from Fluor after Westinghouse’s bankruptcy. The utility used the report to assess whether it was feasible to continue the nuclear project, he said.

An effort to reach a Santee Cooper spokesperson was not successful Monday.

State Rep. Kirkman Finlay, the Richland County Republican who is on a committee investigating the nuclear project’s failure, said he had not seen the Fluor report but its findings are no surprise.

Finlay said Fluor’s assessment could have been helpful to lawmakers if it had been conducted sooner.

“By the time they realized there were issues and the magnitude of those issues, the ship had already sailed,” Finlay said. “The report would have been great to have two years earlier.”

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