State begins hearings on proposed nuclear plants Monday

COLUMBIA -- Beginning Monday, state regulators will hold hearings that promise to be as combustible as the topic.

That's when the Public Service Commission listens to arguments on whether expanding nuclear power is the best way to meet South Carolina's energy needs.

Specifically, the panel will consider a proposal from SCE&G and its partner Santee Cooper to build two new reactors costing $9.8 billion at their nuclear plant in Jenkinsville, 25 miles northwest of Columbia.

The new reactors each could generate 1,117 megawatts, combining to provide enough power for about 1.9 million households, according to the electric industry. They would be built next to the existing 966 megawatt nuclear plant, which went into operation in 1984.

The fireworks started last week when environmental groups accused state officials of "selling out" to the power companies.

Friends of the Earth and the Sierra Club of South Carolina charged that the Office of Regulatory Staff offered a proposed settlement that "trounces the public interest and caves in to virtually everything sought" by the utility.

"The proposal ... is not only a clear sell-out of the public interest over the interests of SCE&G, but it also calls into question just who this agency represents," said Tom Clements with Friends of the Earth.

Clements urged that the agency be investigated, claiming that it has been "captured by corporate interests."

Dukes Scott, the agency's executive director, said "there is no agreement between ORS and SCE&G."

The proposal, which state law requires his office to draft, was sent to all parties involved in the case to see if "there was any room for discussion," Scott added.

Scott defended his agency, saying it does represent the public interest.

And, Scott added, it also must consider what's best for economic development as well as integrity of the utilities.

A NUCLEAR TREND

The nuclear debate in the United States has been largely dormant since the 1979 meltdown at Three Mile Island, which caused no injuries or radiation leakage but shattered public confidence in commercial nuclear power.

Times have changed, and the public's memory has faded. Also, environmental concerns over greenhouse gases -- the prime culprit of global warming -- and the nation's dependency on foreign oil have prompted utilities to reconsider the nuclear option.

South Carolina, which has seven reactors at four sites, has a long history with nuclear energy. In 1958, SCE&G, along with three other utilities, built a 17-megawatt test reactor at Parr Reservoir, near the site of the utility's V.C. Summer Nuclear Station in Fairfield County.

The state's first commercial reactor at H.B. Robinson Power Station near Hartsville went into operation in March 1971, followed by nuclear plants in Oconee and York counties. The V.C. Summer reactor went online in 1984.

Overall, 52 percent of the electricity consumed by South Carolinians is generated by nuclear power. That ranks the state third-highest in nuclear power consumption compared to the national average of about 20 percent, according to the federal government.

The pro and con arguments over the merits of building more nuclear reactors will be complicated, and will require testimony from a host of expert witnesses.

THE BEST CHOICE?

The issue pits the utilities, which say they need the reactors to meet the state's future energy needs, against environmentalists and citizens groups, who say there are safer and more economical ways to do the same.

SCE&G, which has 646,000 electricity customers in South Carolina, expects to add 130,000 more customers in the next 10 years.

Its partner, state-operated Santee Cooper of Moncks Corner, projects a 16 percent increase in customers by 2020.

Santee Cooper has 155,000 customers in three coastal counties and provides power to 685,000 more customers through 20 electric cooperatives.

SCE&G, which is the principal subsidiary of Columbia-based SCANA Corp., said nuclear is more reliable, economical and better for the environment than other power sources.

"Nuclear clearly winds up being the less expensive option," said Kevin Marsh, SCE&G president.

Opponents charge that the utility has not given enough consideration to using optional sources such as wind and solar power. And there's the inherent issue of safety.

One drawback to solar and wind as far as generating power is that they are not available for around-the-clock use, Marsh said.

"A nuclear plant typically runs all the time," Marsh said.

"We are not opposed to alternative energy. We think there will be a place for alternative energy when it's more cost-effective."

Clements said the utility should emphasize conservation instead of building big, expensive generating plants.

"It's much cheaper to save a kilowatt than to produce a kilowatt," Clements said.

SCE&G plans to build reactor units designed by Westinghouse called the AP1000. While it's the only reactor design that has been certified by federal officials, it so far has gone through 15 revisions. Four AP1000 reactors are under construction in China, but none has been built in the United States.

When talk turns to safety, SCE&G executives point to their company's own experience over the past quarter century of running the V.C. Summer plant without incident.

FINANCING REACTORS

Money, where it will come from, and how the project will be paid for will be another part of the hearing.

In 2004, the state Legislature passed a law allowing utilities to increase electric rates to cover the cost of borrowing billions of dollars to pay for the new reactors.

Marsh said the pay-as-you-go approach should lower construction costs of the units by $1 billion.

SCE&G proposes to phase in a 37 percent rate increase over the life of the project, which will extend to 2019. The rate hikes, if approved, would start in March and be in increments ranging from less than a half percent to 4 percent.

The rate hike, though, will not be granted all at once, state officials said. Instead, the utility will have to make its case each year to the commission.

Being allowed to raise rates from the outset of the project will help the utility's case in attracting lenders, officials said.

"Our ability to borrow the money on Wall Street is made significantly easier when Wall Street gets the signal from the state that it is behind us," Marsh said.

Opponents, though, believe that the country's current financial crisis will make it more difficult and more expensive to find the money for the project.

They also say the utilities have underestimated the cost of the project. They say SCE&G's projected costs are less than half of what federal officials say is the average price tag of a reactor.

SCE&G's costs are lower because the reactors will be built on a site that it owns and much of the infrastructure needed to support expansion is in place, said Jimmy Addison, the utility's chief financial officer.

The utility also has developed an evacuation plan and has installed a warning system to alert the surrounding community, Addison said. Those are costs that would have to be added if the utility was building the reactors at an undeveloped site.