South Carolina’s state-owned public utility has voted to stop construction on two billion-dollar nuclear reactors. The reactors were set to be among the first new nuclear reactors built in the U.S. in decades, but the vote by Santee Cooper’s board on Monday, July 31, 2017 likely ends their future.

The reactors were set to be among the first built in the U.S. in decades. While the decision will save customers billions in additional costs, customers of the two utilities — Santee Cooper and South Carolina Electric & Gas — may get little to nothing refunded of the billions they’ve already paid for the now-abandoned project.

“I’m disappointed today not just for Santee Cooper and its customers but for our country and the industry as a whole,” said Santee Cooper CEO Lonnie Carter. “If you really believe we need to reduce carbon, this was the way to do it.”

Energy demands are far less than the utility’s pre-Great Recession projections that factored into the initial decision to build.
But Monday’s decision may eventually result in the utility putting a coal-fired unit idled earlier this year back in operation. Another option for supplying power needs in the decades to come include building a natural gas unit.

“Absolutely, this pushes us back to more carbon, whether it’s natural gas or coal,” Carter said.

Santee Cooper’s board said the decision to end construction will save customers an estimated $7 billion. The utility had already spent about $5 billion for its 45 percent share of the project, and completing it would have cost an additional $8 billion, plus $3.4 billion in interest.
“I’m not celebrating,” said Tom Clements of Friends of the Earth, which has questioned the project from the outset. “This is a sad day for South Carolina. So much money has been wasted. Ratepayers are losers any way you take it.”

He said the group will work to “get to the bottom line of how this happened, who’s responsible” and what that means for customers.

Gov. Henry McMaster called for legislators to hold hearings to get customers’ questions answered.

The project has been shrouded in doubt since earlier this year, when primary contractor Westinghouse filed for bankruptcy protection.

The utilities have since determined the project likely wouldn’t have been finished until 2024. Under a timeline adopted in 2012, the first reactor was supposed to be operational earlier this year. Westinghouse hasn’t been forthright since, according to Santee Cooper.

South Carolina Electric & Gas, which owns 55 percent, announced its plans shortly after Santee Cooper’s unanimous vote. SCANA, SCE&G’s parent company, will seek approval from regulators Tuesday about their abandonment plans.
Under the approved Santee Cooper resolution, all work will end within six months. How quickly within that timeframe workers at the site will lose their jobs is uncertain.

About 5,000 people are employed at the site by contractors and subcontractors. SCE&G employs an additional 600 workers for the project, according to the utility.

by Matt Ridley

The public have paid the price for years of missteps: it’s time to scrap Hinkley Point C and support the shale revolution

Shortly before parliament broke up this month, there was a debate on a Lords select committee report on electricity policy that was remarkable for its hard-hitting conclusions. The speakers, and signatories of the report, included a former Labour chancellor, Tory energy secretary, Tory Scottish secretary, cabinet secretary, ambassador to the European Union and Treasury permanent secretary, as well as a bishop, an economics professor, a Labour media tycoon and a Lib Dem who was shortlisted for governor of the Bank of England.

Genuine heavyweights, in short. They were in general agreement: energy policy is a mess, decarbonisation has been pursued at the expense of affordability and, in particular, the nuclear plant at Hinkley Point C in Somerset is an expensive disaster. Their report came out before the devastating National Audit Office report on Hinkley, which said the government had “locked consumers into a risky and expensive project [and] did not consider sufficiently the risks and costs to the consumer”.

Hinkley is but the worst example of a nationalised energy policy of picking losers. The diesel fiasco is another. The wind industry, with its hefty subsidies paid from the poor to the rich to produce unreliable power, is a third. The biomass mess (high carbon, high cost and environmental damage) is a fourth.

The liberalised energy markets introduced by Nigel Lawson in 1982, embraced by the Blair government and emulated across Europe, delivered both affordability and reliability. But they were abandoned and, in the words of the Lords committee, “a succession of policy interventions has led to the creation of a complex system of subsidies and government contracts at the expense of competition. Nobody has built a power station without some form of government guarantee since 2012.”

All three parties share the blame. Labour’s Climate Change Act of 2008 made Britain the only country with mandatory decarbonisation targets, a crony-capitalist’s dream. The Lib Dems who ran the energy department for five years, Chris Huhne and Ed Davey, negotiated the disastrous Hinkley contract. The Tories reviewed the decision in 2016, by which time it was clear we had managed the unique feat of finding a technology that was untested yet already obsolete. They decided to go ahead anyway, missing the chance to blame the other parties for it. As the energy analyst Peter Atherton put it, the three parties “have managed to design possibly the most expensive programme for delivering nuclear power we could have come up with”.

The chief Lib Dem mistake was to ignore the shale gas and oil revolutions under way in America and assume that fossil fuel prices would rise from already high levels. By 2011, influenced by peak-oil nonsense and lobbied by professors of “sustainability”, the department of energy and climate change was projecting that the oil price would be between $97 and $126 per barrel in 2017. Today it is about $50 a barrel, roughly half the lowest of the 2011 projections. Gas prices were expected to be about 76p per therm by now, whereas they are actually about half that: 37p.

The shale revolution is gathering pace all the time. Britain has very promising shales and could prosper and cut emissions if it joins in, so let us hope the first wells about to be drilled in Lancashire by Cuadrilla, against the determined opposition of wealthy, middle-class protesters, prove successful. (No, I don’t have a commercial interest in shale.)

American industry pays about half as much for its electricity as we do
This forecasting mistake is behind much of the rising cost of Hinkley. In 2015 the whole-life cost of its power was expected to be £14 billion. Now it is £50 billion. Because consumers are on the hook to pay the difference between the wholesale price of electricity and the “strike price” for Hinkley, we must hope that the project is badly delayed, because that way our children will at least spend fewer years paying inflated electricity prices.

These bad forecasts, widely criticised at the time, make all strike prices horribly expensive, for onshore and offshore wind and solar as well. Lib Dem ministers kept saying at the time that subsidies for renewables and Hinkley would protect the consumer against “volatile” gas prices. Yes, they have done so: by guaranteeing high prices. Oh for a little downward volatility!

Britain’s industrial and commercial users now have some of the highest electricity prices in the developed world, which find their way to households in cost of living and a downward pressure on wages. American industry pays about half as much for its electricity as we do, and everyone benefits. Energy prices are not just any consumer price: they determine the prosperity of the entire economy.

It is just possible some new arrangement could be salvaged

Well, no use crying over spilt future money. What are we to do? Here is where it could get interesting. Almost nobody wants Hinkley to go ahead, apart from the contractors who get to build it. EDF and Areva, the French owner and developer, are in trouble over the only two comparable reactors in Europe. The one at Flamanville is still to start working, many years behind schedule. The French unions want Hinkley cancelled. Lord Howell of Guildford, the former energy secretary, wisely pointed out in the Lords that the key player is China, a partner in the project. Rather than cost, the government’s excuse for revisiting Hinkley last year was partly worries about security. This was a silly worry and bad diplomacy. However, it is not clear China wants to go ahead, and subtle negotiation could tease this out. The great prize for China was regulatory approval through Britain’s gold-standard “generic design assessment” process, which could unlock foreign markets and give a green light for a Chinese-built reactor at Bradwell in Essex.

But Lord Howell says the Chinese increasingly realise that the Hinkley design is a dead end, as costs escalate and delays grow. And they know that the future for nuclear power must lie in smaller, modular units, mass-manufactured like cars rather than assembled from scratch like Egyptian pyramids. Their “Nimble Dragon” design could slot into both the Hinkley and Bradwell sites, perhaps beside the larger Hualong design.