The board of directors of Santee Cooper approved the suspension of construction of Units 2 and 3 at VC Summer Nuclear Station in Jenkinsville, South Carolina. The decision is expected to save Santee Cooper customers nearly US$7bn in additional costs to complete the project, including projected interest during construction.
The decision to suspend construction is based in large part on an analysis of detailed schedule and cost data, from both project contractor Westinghouse Electric Co and subcontractor Fluor Corp, first revealed after Westinghouse filed for bankruptcy in March.
“Generation diversity remains an important strategy for Santee Cooper, but the costs of these units are simply too much for our customers to bear,” said Leighton Lord, chairman of the Santee Cooper board of directors. “Even considering these project challenges, Santee Cooper is proud of our role in this initial effort to restart a 30-years-dormant industry. Nuclear power needs to remain part of the US energy mix.”
The decision follows latest costings carried out after project contractor Westinghouse Electric Co filed for bankruptcy in March. The analysis shows the project would not be finished until 2024, four years after the most recent completion date provided by Westinghouse, and would end up costing Santee Cooper customers a total of US$11.4bn. The original budget had been US$5.1bn plus interest for its 45% share of the project.
The most recent analysis, anticipating the rejection of the contract by Westinghouse in bankruptcy proceedings, shows the final cost for Santee Cooper to complete the project would be US$8.0bn for construction and approximately US$3.4bn for interest. The schedule delays increased the projected interest costs 143% over the original plan.
Santee Cooper has spent approximately US$4.7bn in construction and interest to date for its 45% share of the new nuclear power project. The analysis shows the project would not be finished until 2024, four years after the most recent completion date provided by Westinghouse, and would end up costing Santee Cooper customers a total of US$11.4bn.
Santee Cooper and majority partner South Carolina Electric & Gas Co gave Westinghouse full notice to proceed in April 2012.
“After Westinghouse’s bankruptcy and anticipated rejection of the fixed-price contract, the best case scenario shows this project would be several years late and 75% more than originally planned,” said Lonnie Carter, Santee Cooper president and CEO. “We simply cannot ask our customers to pay for a project that has become uneconomical. And even though suspending construction is the best option for them, we are disappointed that our contractor has failed to meet its obligations and put Santee Cooper and our customers in this situation.”
Westinghouse’s parent, Toshiba Corp, has contractually agreed to pay Santee Cooper US$976m in settlement beginning later this year and continuing through 2022. “Santee Cooper will continue to pursue Westinghouse assets and other revenues and assets, through bankruptcy court and other legal channels, to further offset costs,” Carter said.