When two South Carolina utilities scrapped a nuclear power plant in mid-construction this week, customers were left with a $5 billion bill that will take decades to pay off.
Charlotte-based Duke Energy has also planned to build a new nuclear plant in South Carolina, and won a federal license in December. The abrupt abandonment of the Summer plant by Santee Cooper and South Carolina Electric & Gas did little to entice Duke to go ahead with its own plan.
But even if Duke never builds its Lee nuclear station near Gaffney, S.C., its customers may still be on the hook for $541 million.
That’s how much Duke has already spent to buy land and prepare the site, negotiate contracts and other costs for its Lee plant, according to a filing to regulators this week.
Why should customers pay so much for a plant that might never exist?
A 2007 North Carolina law lets utilities include pre-construction development costs for nuclear plants in requests for rate hikes, so long as regulators deem the costs to be “reasonable and prudent.” That’s true even if Duke cancels Lee.
Duke Energy Carolinas, one of Duke’s two utilities in the Carolinas, plans to ask for a North Carolina rate hike on Aug. 25.
Months ago, after Westinghouse, the reactor contractor for the Summer plant filed for bankruptcy, North Carolina’s Utilities Commission was already demanding answers from Duke about Lee’s future.
Those answers, including updates on expenses for Lee and Duke’s plan for recovering them, will come when the rate case is filed later this month, spokeswoman Rita Sipe said Thursday.
“We’ve been closely following the Toshiba/Westinghouse developments, their impact on the Summer and (Georgia Power’s) Vogtle projects, and the recent decisions by SCE&G and Santee Cooper,” she said.
There’s precedent for Duke customers paying for a nuclear plant that never generated the first watt of electricity.
Duke canceled its Cherokee plant – on the same site Lee would occupy – in 1982 following the Three Mile Island nuclear accident in 1979. Duke’s customers paid $224 million for the partially-built plant.
When the Summer plant was scrapped this week, South Carolina lawmakers soon began second-guessing a state law that can stick customers with such costs. Unlike North Carolina’s law, South Carolina doesn’t require those costs to be included in general rate cases.
SCE&G and state-owned Santee Cooper had together spent about $9 billion on Summer. Investor-owned SCE&G will try to recover its $5 billion share from customers over six decades, Columbia’s State newspaper reported, although the company doesn’t expect further rate increases for several years.
A bipartisan coalition of South Carolina lawmakers, meanwhile, pledged to reexamine a 2007 state law that let utilities bill customers even if the plant never operates, the Associated Press reported.
“We unfortunately have given more of a blank check to the utilities than we ever should have,” and regulators aren’t doing their job, said Rep. Kirkman Finlay, a Columbia Republican. “My one promise is this will never happen again.”