September 6th
Post and Courier

It took a threat to fire Santee Cooper’s executive board, but Gov. Henry McMaster was finally able to extract a February 2016 audit of the now-failed nuclear reactor project in Fairfield County. And then he made it public. Good for the governor.

Prepared by the Bechtel Corp., a San Francisco-based engineering firm, the audit details shortcomings in the V.C. Summer reactor project. It cites serious problems with project quality, management and the timetable for completion.

And those problems were detailed well in advance of plans by SCANA to increase its share of project costs by $800 million and approve a new fixed-price agreement with its contractor, Westinghouse, which has since gone bankrupt.

That information, however, was not provided to the Office of Regulatory Control, so that it could have made a more informed response to SCANA’s plan, which ultimately required another rate hike.

The ORC requested the report, but was told by SCANA officials that it didn’t have a physical copy of it. As noted in our news report, utility officials contradicted that earlier assertion under oath last month. SCANA is the parent company of SCE&G, which supplies 709,000 customers with electricity. As a quasi-state agency, Santee Cooper is not subject to the same regulatory requirements as SCANA.

Certainly, there’s no reason to doubt the governor’s decision to aggressively seek the audit and to make it public over SCANA’s strong objections. Utility officials insisted that it should remain privileged information to use in a lawsuit against Westinghouse.

The audit shows a broad range of management and operational problems with the reactor project. And that could create problems for the utility since it could encourage the state Public Service Commission to reject SCANA’s proposal to have ratepayers to continue paying for the defunct project over the next 60 years. The PSC can reject further rate increases if it can be determined that SCANA made imprudent decisions.

Given the project’s failure, it is difficult to believe that problems cited in the audit were substantially addressed, as a SCANA spokesman asserts.
Rather, the audit findings strengthen the argument that the public shouldn’t have to pay for the disastrous project, the costs for which rose from $9 billion to a projected $25 billion. Ratepayers could be responsible for a staggering $2.2 billion.

The 2007 Base Load Review Act, approved with virtually no legislative opposition, put the public on the hook for project costs — and shortfalls. Meanwhile, SCANA has been allowed to add 10 percent to project expenses to ensure continuing profits for its shareholders. Perhaps that helps explain why contractors for the project weren’t “commercially motivated” to finish it, as the audit put it.

The audit supplements much of what is known about this sorry project, and provides a new perspective on the continuing expectation of SCANA to make the ratepaying public pay for the debacle for decades into the future. That shouldn’t be allowed to happen, and the Bechtel audit offers more reasons why.

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