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S Carolina utilities see 'significant challenges' to completing Summer

Washington — South Carolina Electric & Gas and Santee Cooper said Thursday there are "significant challenges" to completing two 1,150-MW partly-built nuclear generating units at their Summer station in Jenkinsville, South Carolina.

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The likely cost to complete the units will "materially exceed" previous estimates, and they may not be completed in time to meet a December 2020 deadline required to receive hundreds of millions of dollars in federal production tax credits, the companies said in a joint statement. SCE&G and Santee Cooper will announce their decision on whether to complete or abandon one or both units soon, they said.

The fate of the two reactors and two similar units at Georgia Power's Vogtle plant in Waynesboro, Georgia have been thrown into doubt by the bankruptcy of reactor vendor Westinghouse.

The announcement came as the companies said they reached an agreement with Westinghouse parent company Toshiba in which the power companies will receive a total of $2.17 billion in connection with the Japanese company's guarantee of the contract to build the units.

SCE&G and Santee Cooper said in the statement that the Toshiba payments are guaranteed regardless of whether they finish one or both units.

Toshiba guaranteed the engineering, procurement and construction contracts signed by Westinghouse in 2008 to provide the AP1000 units at Summer. The contract was modified to make it a fixed-price contract as costs escalated and delays mounted.

Westinghouse cited an inability to fund the costs of building the Summer units and the two at Vogtle for financial problems that caused it to file for bankruptcy reorganization in March. The company indicated it would walk away from the EPC contract, leaving the utilities to decide the fate of the unfinished units, which are about two-thirds complete overall.

The settlement of the Toshiba guarantee issue was identified by SCE&G executives this summer as a key factor in its ability to consider finishing one or both of the reactors.

Work at the Summer and Vogtle plant expansions has continued under interim agreements under which the utilities are funding all expenses.

SCE&G, which owns 55% of the Summer expansion project, would receive $1.19 billion from Toshiba to satisfy the contract guarantee. Santee Cooper would get $976 million.

Georgia Power and its three public power company partners in the Vogtle expansion reached an agreement with Toshiba June 10 on payments by the Japanese company of up to $3.68 billion in connection with the guarantee on the EPC contract for the two units there. That agreement was contingent on a similar deal being reached with SCE&G and Santee Cooper.

Executives of Georgia Power's parent company have said they plan to announce this summer a decision on whether to continue with completion of the Vogtle units.

Both groups of owners have said any decision to go forward would also depend on the approval of the moves by their respective state regulators.

Environmental groups have said the projects were flawed from the start, and the utilities should have pursued lower-cost generating sources.

The Summer and Vogtle units were to be the first reactors of the AP1000 design to operate in the US. The design had been touted as a safer reactor design that would benefit from modular construction techniques to speed construction.

Instead, licensing issues, first-of-a-kind design problems and component manufacturing problems slowed construction and increased costs. Cost estimates of $10 billion to $14 billion for each two-unit project have ballooned to more than $20 billion for each site by some analysts' calculations.

--William Freebairn,

--Edited by Keiron Greenhalgh,