Back in 2006, few people had heard of hydraulic fracking.
Fukushima was just another city in Japan.
And the desire to reduce dependence on oil from the volatile Middle East — along with growing acceptance of the threat of global warming — had politicians everywhere talking up the benefits of a carbon-free energy source: nuclear.
Those were the halcyon days of America’s nuclear renaissance. Congress was raining all sorts of subsidies on a power source seen as a viable replacement for coal-fired power plants belching black smoke. Twenty new power plants were under construction worldwide. Here in South Carolina, nuclear energy has firmly been one of the technologies in the state’s cluster development strategy.
By 2009, a relatively small private utility company owned by SCANA, South Carolina Electric & Gas, along with the state-owned utility Santee Cooper, had proposed building two new nuclear reactors at a facility called V.C. Summer, about 30 miles outside Columbia in Jenkinsville. The estimated cost was $10 billion.
Fast-forward to 2013, and things aren’t looking so hot for the industry nationwide or around the world. By the time SCANA received approval from the Nuclear Regulatory Commission for building its new reactors, in March of 2012, the landscape had shifted drastically. Japan and several European countries have backed away from nuclear energy following the 2011 disaster at Fukushima. The advent of fracking in the United States has produced a glut of cheap natural gas and radically altered global energy markets — and thus the profitability of nuclear energy.
South Carolina and Georgia, however, are still sporting those rose-tinted specs from the mid-2000s of the nuclear glory days. They are the only two states seriously considering nuclear power as a viable long-term power source. Not only that, but locally the economic development community has continued to embrace the idea of a nuclear renaissance, including the development of a new generation of technology called small modular reactors (SMRs). Columbia, in fact, is practically ground zero for the idea of such reactors, having held the Small Modular Reactor Conference here for the past three years, the most recent one in April.
So, if South Carolina continues to embrace a power source that others are leaving behind, are we the last state hanging on to a dead idea? Or could the fortunes of nuclear energy turn around again at some point?
Against the Grain
Before deciding on building new nuclear generation stations at V.C. Summer, SCANA looked at a whole range of possible options, including solar and wind, SCANA spokeswoman Rhonda O’Banion told Free Times. But in terms of generating large amounts of power for the long term, she said, “It still points to nuclear.”
That’s at odds with the current national and international zeitgeist.
“Thanks to cheap natural gas, America’s nuclear renaissance is on hold,” read a June 1 headline in The Economist, a magazine based in the United Kingdom.
Utility analyst Mark Cooper, a senior fellow for economic analysis at Vermont Law School’s Institute for Energy and the Environment, takes that a step further.
“The nuclear renaissance is dead,” he said in a recent interview with Free Times. “There is none. It never got started.”
The “sum total” of the nuclear renaissance in America, Cooper says, might be at a facility in Georgia and at the V.C. Summer plant in South Carolina. “That’s about it.”
According to The Economist, the federal Nuclear Regulatory Commission has received applications for 24 nuclear reactors on top of the 104 that already exist in the United States.
“But none is likely to be built soon,” the magazine reported. “Some are backed by consortia that have fallen apart; others have been withdrawn. In early May, for example, Duke Energy, another utility, told the NRC, which must approve new plants, that it was calling off two of the six reactors it had planned. Far from building new reactors, utilities are closing existing ones. Also in May, Dominion power shut a nuclear plant in Wisconsin that was licensed for another 20 years, ‘based purely on economics’.”
Meanwhile, in Iowa, MidAmerican Energy is refunding public money that went to finance a nuclear feasibility study in that state, and it will not continue to build a nuclear unit there, according to power generation industry analyst GenerationHub.
“MidAmerican Energy Holdings is part of the ever-growing Berkshire Hathaway corporate family, headed by investor Warren Buffett,” its chief news analyst wrote. The news immediately had analysts sending around emails as a death knell indicator for the industry, saying the influential mega-investor Buffett had made a big bet against nuclear power in the United States.
This all comes at a time when European countries like Germany and Switzerland are phasing out nuclear power in lieu of renewable energy such as wind and solar. And in a 2011 referendum, voters in Italy shot down a nuclear program in that country.
Asked why South Carolina is running in the opposite direction, SCANA spokeswoman O’Banion said while she could only speak for her company: “When you look at large-scale base-load generation, which is what we need for the long term, it still points to nuclear.”
Oconee 1, 2 and 3 (Duke): 30 miles west of Greenville Robinson 2 (Progress Energy): 26 miles northwest of Florence V.C. Summer (SCE&G): 26 miles northwest of Columbia Vogtle 1 (Southern Nuclear Operating Co.): 25 miles southeast of Augusta, Georgia
To a large extent, the nuclear renaissance in South Carolina is not hypothetical — the state already gets approximately 51 percent of its electricity from nuclear power, according to the U.S. Energy Information Administration. Nationwide, only about one-fifth of electricity is generated from nuclear power.
The question, then, is not whether South Carolina has embraced nuclear power, but why — and whether it makes sense for it to continue to do so when the trends everywhere are going against it.
Perhaps the biggest reason for why South Carolina has continued along the nuclear path is the way new reactors are being financed here — by you.
Under a unique financing system in which customers and not shareholders are paying the cost to build the project up front, the $10 billion V.C. Summer project is still forging ahead. That’s despite years of cost overruns and years of ratcheting up the power bills on the people of South Carolina.
To pay for the new reactors at V.C. Summer, the General Assembly went all-in by passing a unique financing scheme in 2007 called the Base Load Review Act, which allowed utility companies to jack up power bills on its customers to finance new power plants. The law shifted the risk and costs of building the new nuclear power plants into the wallets of ratepayers and off the backs of the company shareholders.
“We’re one of two new facilities that have progressed as far as we have with a new nuclear construction project in 30 years in this country,” SCANA spokeswoman O’Banion told Free Times June 6 about the Jenkinsville V.C. Summer site in rural Fairfield County.
The first of the two nuclear reactors there was scheduled to come online in March 2017, but SCANA recently announced it’s been pushed back six months to a year because of the fabrication and delivery of a module part that comes from Louisiana. SCE&G just recently hiked power bills another 3 percent to cover costs on the project. Customers have already seen five rate hikes over the past two years.
SCANA now expects the first new unit to begin operating in either the fourth quarter of 2017 or first quarter of 2018, according to Engineering News-Record. The first reactor had been expected to come online in 2016.
“Stephen Byrne, senior vice president at SCANA and chief operating officer and president of generation and transmission at SCE&G, said during an ‘analysts day’ meeting in New York City that a preliminary estimate suggests the delay could add as much as $200 million to the cost of SCE&G’s 55 percent share of the two-unit Summer expansion project,” Engineering News-Record reported. SCANA will update the Public Service Commission on its construction of V.C. Summer at 9:30 a.m. June 26.
As that site’s construction moves forward, the owner of the remaining 45 percent of it — state-owned utility Santee Cooper — has been trying to sell off parts of its stake in the project because of diminishing customer demand for power. That waning power usage has come as ratepayers became more energy efficient and the rate of population growth declined in the state during an economic downturn.
The Sierra Club of South Carolina points to Santee Cooper trying to sell off its commitment to the two new nuclear reactors as a reason the new plants should be abandoned.
“That’s the handwriting on the wall,” says the group’s lawyer Bob Guild.
V.C. Summer. File photo
Does It Still Make Sense?
Despite delays, cost overruns and a changing energy market, SCANA strongly maintains that nuclear expansion makes sense for South Carolina in the long term.
“This project looks to the long term for meeting the needs of our customers well into the future and meeting those needs in a way that’s clean, safe and reliable,” says SCANA’s O’Banion. “And nuclear is the answer to that.”
For its part, SCE&G believes nuclear power is the “best low-cost, long-term solution” for South Carolina’s energy needs, spokesman Eric Boomhower told Free Times back in March when a report critical of the V.C. Summer expansion came out. He added that when the two new reactors come online, SCE&G’s energy portfolio will be about a third nuclear, a third coal and a third natural gas — with more than 60 percent what he called non-emitting.
Critics of the under-construction nuclear site say it’s being considered for all the wrong reasons, however, particularly because of the self-serving financial scheme its owners developed to build it.
Perhaps the staunchest critic of the new nuke site is Mark Cooper, who has studied South Carolina’s nuclear situation for about four years, and who authored a damning report on it in March. He’s also testified in front of the state’s Public Service Commission about the issue. The former consumer advocate says the reason South Carolina is going forward with the nuclear option is because we’re a utility-friendly state lacking a viable consumer activist movement, and our State House and regulatory boards are packed with people in the tank for the industry.
“They have sold you a bill of goods,” Cooper says of the utilities and the V.C. Summer site. “They are peddling the Kool-Aid and policymakers have drunk it.”
In his March study, titled “Public Risk, Private Profit: Ratepayer Cost, Utility Imprudence,” Cooper threw a gut punch. He said South Carolina ratepayers have gotten hosed by the utility companies, and he recommended plant owners could save ratepayers as much as $10 billion over four decades if they canceled the nuclear project and developed alternative energy instead.
In a June 5 interview with Free Times, Cooper explained his reasoning. It mainly has to do with the Base Load Review Act, which put ratepayers rather than shareholders on the hook financially for going full bore into a nuclear future no matter what.
Cooper likens it to buying a pair of shoes. In our capitalist economy when you sell a pair of shoes at a shoe store, the capitalist has taken 100 percent of the risk in stocking those shoes in the hope he or she will sell them. The idea is that the return on the investment and equity is the reward you get for taking the risk that the shoes won’t sell.
With South Carolina and its nuclear project, it’s like utilities have asked the customer to pay in advance with no guarantee of ever getting any shoes.
“It’s not the way our capitalist economy is supposed to work,” Cooper says.
To that end, the South Carolina chapter of the Sierra Club is in a state Supreme Court fight over the V.C. Summer site alongside an unusual ally against the utility and a state regulatory board. Fighting with the conservation group is the South Carolina Users Committee, which represents large industrial customers like Boeing, chemical plants, paper mills and other big manufacturing plants that need affordable energy to operate.
Their argument is that SCE&G and the state’s Public Service Commission have embraced a meaningless standard of prudence in allowing the utility to pass along all costs of V.C. Summer to ratepayers without question, says state Sierra Club lawyer Guild.
“It’s like telling you that a used car is going to cost you a hundred bucks, but when you find out that you have to have wheels on it and an engine in it, you learn it’s a thousand bucks — and that’s what we assert that SCE&G has done here,” Guild says. “They’ve suckered the Public Service Commission and South Carolina policymakers — generally the Legislature — into thinking the new regime of new nuclear power was going to be cheap and safe, and it’s proving to be neither of those things.”
Guild agrees with Cooper that the best plan would be to pull the plug on the V.C. Summer site and aggressively replace it with natural gas as a transitional fuel. (The Sierra Club has concerns about fracking, but sees natural gas as a transitional fuel source that could help get America off carbon by 2050, which is the group’s goal.)
Jobs of the Future?
The Palmetto State’s political leadership tends to favor nuclear power. The state generates a sliver more than half its power from nuclear energy, and politicians enjoy the idea of attracting high-paying nuclear jobs to South Carolina. The utilities have also long donated heavily to the campaign coffers of lawmakers on both sides of the aisle.
This all-in support from state and federal lawmakers has played a key part in South Carolina being an island for new nuclear power. And one of the political selling points that make such a big bet attractive politically has been jobs. Right now the V.C. Summer project is employing about 1,600 workers on its construction site, says SCANA’s O’Banion.
“When the project peaks, we’ll have 3,000 to 3,500 jobs,” she added. When the reactors are fully operating, she said, they’ll have about 800 full-time jobs there.
Three years ago, Columbia-based EngenuitySC developed a public-private initiative called NuHub to take advantage of all the new nuclear activity here. By bringing together higher education institutions with private industry and other groups, NuHub is working to “make the region a world-class location for nuclear power,” according to NuHub senior project manager Megan Hughes.
In a June 7 interview with Free Times, Hughes acknowledged that the Palmetto State’s march toward more nuclear power here might be at odds with a national — and international — narrative forming about atomic energy. It has been, for instance, only two years ago since an earthquake and tsunami in Fukushima created the worst nuclear meltdown since Russia’s 1986 Chernobyl accident. Since then, Japan has restarted “only two of the nation’s 54 reactors, and dangers persist at Fukushima as workers struggle to contain radioactive wastewater leaks,” according to the Smithsonian magazine.
“You are seeing internationally some trends changing for nuclear,” Hughes says, “but you are also seeing some trends where there are economic engines like China that are investing heavily in their nuclear programs and there are new builds going on all over the world.” And the only new nuclear builds going on the U.S. are “happening right here in our backyard,” she says, so NuHub wants to make sure the region takes advantage of the job creation potential.
Asked what she thought was one of the defining factors of South Carolina’s pro-nuclear stance, Hughes said it was the way the state’s political community worked with the nuclear industry to make it easier to tackle a capital investment like a new nuclear plant. In other words, the Base Load Review Act of 2007 that has drawn the ire of critics from Mark Cooper to the Sierra Club and others.
“A lot of it has to do with the incredibly positive political environment that we’ve got for nuclear here in our state,” Hughes says. “We’ve got a state Legislature that supports it; we’ve got a federal delegation that’s very pro-nuclear; we’ve got a general public that’s very used to nuclear. So it makes taking on projects like nuclear that in some places can be controversial — it makes doing it in South Carolina easier business, which quite frankly, is a good thing for our state and our workforce because it provides an incredible economic value.”
Beyond the nuclear reactors being built at V.C. Summer, NuHub is also focused on promoting the development of small modular reactors, an effort the federal Department of Energy backs. Proponents say SMRs offer lower startup costs and greater site flexibility than traditional reactors; opponents say the technology is untested and potentially unsafe.
Hughes says SMRs are a “tremendously exciting opportunity” for the state, “because they can be built on-site, they can be shipped anywhere in the world and they have the potential to be self-contained and can power a community that may have never had power before.”
The fact that Columbia has held three SMR conferences, she says, “just goes to show that folks are recognizing that South Carolina is playing a real role as a leader not only in nuclear power today but in future generations in nuclear power. That’s a good place to be.”
Not everyone believes that SMRs are the wave of the future, though.
“The industry has moved on to their next unicorn,” says analyst Cooper. “They say the small module reactor is going to solve all these problems, and the answer is there’s no reason to believe it will.”
Cooper is coming out with a paper soon, he says, that will show that under a best-case scenario, SMRs wouldn’t be competitive for 30 years.
“But they’re trying to convince people to build them today, which means those people will pay a tremendous price,” he says.
Crowding Out Other Options?
While Fukushima might have chilled efforts toward more nuclear energy around the globe, it’s clear that just hasn’t been the case here. But beyond the possibility of a nuclear meltdown, the move toward a nuclear future here could have other casualties in any efforts toward creating more renewable energy in the state.
On that front, it appears to have had one already. While other states have moved to embrace solar energy, critics have accused South Carolina’s steadfast thrust toward nuclear power of helping crowd out the prospect of an open solar market in South Carolina.
In this state it is illegal to buy solar energy from an entity that is not legally deemed a utility. What that means is if a company wants to install a solar panel on the roof of a house or a commercial building and sell electricity to the resident or the business, it must be regulated just as if were SCE&G, Duke Energy or another juggernaut in the industry.
During this year’s legislative session, South Carolina lawmakers largely had the backs of the big utilities when they helped fend off for another year a measure that would allow third-party solar financing here.
Earlier this year, legislators in the largely right-wing S.C. House, who are generally sympathetic to the interests of big utilities and industry, completely buried a bill that would make it legal to buy solar energy from non-utilities. Lawmakers in the lower chamber said they worried about how the legislation would affect big utility companies, even though a broad coalition of supporters spoke in favor of the bill, from ministers to retirees.
“The only opponent was a representative of South Carolina’s influential utilities: SCE&G, Duke Energy and Santee Cooper, as well as the state’s electrical cooperatives,” reported The State newspaper at the time.
The bill didn’t fare much better in the state Senate, where lawmakers heard a broad coalition of support for the proposal and just one representative for the utilities argue against it. At the time, Hamilton Davis of the Coastal Conservation League, which is helping lead the fight for third-party solar financing here, said he understood why the utilities were pushing back.
“You’re introducing competition in their territories and they’re fundamentally opposed to that,” he said.
Bob Guild of the Sierra Club agrees.
“If you wed yourself to two new nuclear reactors, which is what we’re doing in South Carolina ... you will crowd out forever the ability to move to those alternatives of efficiency or genuine renewable,” he says.
“Why? Because they’ve got to sell the output of those two reactors, so they will have a strong incentive to suppress those alternatives — and we won’t be able to move into a clean energy future. That’s why it’s so important to change their direction now.”
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