Watchdog group will urge North Carolina regulators to reject any SC effort to hitch merger approval to Duke’s investment in problematic nuclear project
Statement by NC WARN Executive Director Jim Warren:
DURHAM, NC – Credible rumors abound that Duke Energy is under pressure by South Carolina regulators to relieve a SC-owned utility of its share of a troubled nuclear construction project as a condition of approval of the merger with Progress Energy. The propriety of such a deal would be questionable – as evidenced by its below-the-radar profile – and NC WARN will soon notify North Carolina regulators to reject any such scheme that encumbers ratepayers with billions of dollars of investment in the VC Summer project.
Utilities commissions in both states may soon be required to rule on the long-delayed merger if the Federal Energy Regulatory Commission approves the latest version offered by Duke and Progress.
The SC commission must rule on the two utilities’ joint dispatch agreement, while the NC commission must approve the entire merger.
For two years, it has been widely known that South Carolina-owned utility Santee Cooper has sought to shed part or all of its 45 percent investment in two new reactors at the VC Summer plant. That project had already racked up over $500 million in construction cost overruns when it received a federal construction license on March 30.
Additional problems since that time, near-certain design changes indicated by a parallel project in Georgia, and upcoming changes required by the Fukushima disaster, make clear that Summer could well cost $20 billion or more when financing is considered. And there’s a sizeable chance the project will bog down in further finger-pointing, delays, litigation, and ultimate cancellation.
A backroom deal for a merged utility could therefore saddle Duke-Progress customers with up to $10 billion in risky financial commitments on top of those already on the books.
The Charlotte Business Journal recently reported that Duke CEO Jim Rogers is extolling the idea of exporting Summer’s juice to potential customers outside the Southeast. NC WARN will contest that effort, which would leave Carolinas customers bearing the annual rate hikes and cost overruns while Duke pursues its business model of maximizing electricity sales.
NC WARN will soon call on the NC Utilities Commission to investigate the merger-Summer deal.
BROKEN NUCLEAR PLANT A HUGE BURDEN: It is also clear that Progress Energy’s broken containment building at its Crystal River plant in Florida represents far more debt than was on the table when the merger was first negotiated. The insurers are still balking – especially because Progress was warned not to attempt the corner-cutting effort that led to containment cracking – and because fixing the plant will apparently require an unprecedented attempt to replace the building’s walls and roof without damaging the reactor and other components inside.