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SCANA decision to kill nuclear project stuns regulators

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The chairman of the S.C. Public Service Commission charged today that SCANA Corp. “blindsided” state regulators when its subsidiary, South Carolina Electric & Gas,  said it was abandoning construction of two reactor units at V.C. Summer Nuclear Station in Fairfield County.

During this morning’s meeting with SCANA chiefs, commission Chairman Swain Whitfield criticized the surprise decision to walk away from the project, putting some 5,000 people out of work and wiping out millions of dollars of anticipated property tax revenue the county was counting on to pay for schools and government services.

“I’m from Fairfield County and it’s a grim day. Even your harshest critics have called it a sad day for the state of South Carolina and Fairfield County,” Whitfield said, addressing the SCANA executives — CEO Kevin Marsh; Jimmy Addison, executive vice president and CFO; and Steve Byrne, SCE&G president of generation and transmission and COO of SCANA. “I’ll go a little further and say that public trust is at stake here folks.”

Whitfield wanted to know why in April, when SCANA executives first updated commissioners on the troubled project, abandonment was considered the least likely option but by Monday it became the only choice.

“However, are the three of you aware that this commission was blindsided yesterday by this news?” Whitfield asked.

Commissioner Elizabeth Fleming, of Spartanburg, echoed Whitfield’s sentiments, saying she did not know of SCE&G’s plans until she read the press release on Monday. “It was like a gut punch,” Fleming said.

Marsh explained that up until Monday the company had been considering the possibility of completing one of the new units. But that plan was scuttled when SCE&G’s state-operated partner, Santee Cooper, announced it was suspending involvement in the project. Santee Cooper owns 45% of the project while SCE&G has the remaining 55%.

Without a partner, Marsh said SCE&G could not afford to go it alone. He added that SCANA had contacted other potential partners but no one was interested.

SCANA made several attempts to shore up support for the project, which has already cost $9 billion, and even lobbied Congress, the Trump administration and top leaders of the U.S. Department of Energy, Marsh said. The Energy Department did offer a loan, but the company was looking for a grant.

The impact of SCANA’s decision goes beyond the boardroom, observers noted.

According to a Worker Adjustment and Retraining Notification Act notice filed Monday with the S.C. Department of Employment and Workforce, 617 SCE&G employees plus an “unknown number of employees” of affiliated companies that provide administrative support to the project are out of a job. 

In addition, the company has said a total of 5,000 people are involved in construction at the V.C. Summer project site. SCE&G workers affected by the project shutdown have many different titles, including nuclear operators and engineers. The company said the separations are expected to begin Sept. 30, although some employees may remain on the job to assist with the shutdown.

SCE&G plans to provide outplacement and other assistance to the company’s affected employees, according to the letter filed with the workforce agency. The affected workers also will be able to apply for open positions within the company.

Workers employed by the contractors were notified Monday, Byrne said. It will be up to the contractors and their subcontractors to provide severance pay, if any.

Addison told commissioners that the company’s stock has suffered on Wall Street. For the year, SCANA shares have been underperforming their peer group by about 20%, or approximately $1 billion, Addison told commissioners.

“We are aware that the market has been expecting us to proceed with at least one unit the decision to abandon both has been a significant surprise,” Addison said. “Under the current plan the construction risks will no longer exist but the new risk will be the uncertainty about how abandonment costs will be treated under the BLRA (Base Load Review Act). The markets will be watching closely to see how the abandonment provisions under the BLRA are applied in this process.”

So far today, SCANA shares appear to be recovering. The price about 1:45 p.m. today was $67.15 per share, up 4.32% since the market opening.

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