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SCE&G, Santee Cooper were warned about nuclear project problems a year before it failed

VC Summer Nuclear Plant in Jenkinsville / SCANA

Utility companies apparently were warned well in advance about serious problems plaguing a doomed South Carolina nuclear reactor project.

That's according to an independent analysis of the nuclear plant project advised Santee Cooper and South Carolina Electric & Gas Co. to hire someone to enforce contractor accountability at the V.C. Summer Nuclear Station, where two new reactors were being built.

The utilities in 2014 hired Bechtel Corp., a global engineering, construction and project management company, to do an independent analysis of the project. Gov. Henry McMaster's office released the report to reporters Monday over objections from Santee Cooper's attorneys, who asked the governor not to give it to the public.

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In the report, dated February 2016, Bechtel wrote that the project suffers from "major project management issues that must be resolved for project success," including a lack of cohesion among plans and schedules adopted by various contractors.

"The overall morale on the project is low," Bechtel wrote, noting that, at that time, the already years-delayed effort was several years behind schedule. "There is a significant disconnect between construction need date and procurement delivery dates."

The report contains much of the same information as a summary of the analysis written by Santee Cooper's attorneys, obtained by The Associated Press. It describes recommended changes Santee Cooper and SCE&G needed to make to the construction of two new reactors, including hiring someone to ensure contractor accountability and holding regular meetings with contractors.

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State lawmakers probing the project's failure have sought the report, which they hope will shed light on why ratepayers have been forced to fund the now abandoned reactors that are only one-third complete. McMaster, who has said he's looking for a way to save it, had requested the report's release.

On Monday, a top challenger to McMaster for next year's GOP gubernatorial nomination said the governor has been playing politics with the report, which she says he could have obtained as early as Saturday.

"Despite what the governor's office represented to reporters all weekend, he was offered the Bechtel report within hours of his request," Catherine Templeton told AP. "The governor kept the truth from us to protect SCE&G, one of his largest donors, instead of protecting us."

McMaster's office said the governor wasn't informed until Sunday that Santee Cooper would be giving him a copy of the report on Monday.

Santee Cooper board chairman Leighton Lord has said the report led the board to call for an independent construction monitor at V.C. Summer, but that notion was rejected by SCANA, which was primarily in charge of building and starting the reactors.

Eric Boomhower, a spokesman for SCE&G parent company SCANA, told the AP in a statement the utilities had hired Bechtel "to assess challenges to progress on our jointly owned nuclear construction project in anticipation of litigation with the Westinghouse." After receiving the Bechtel report, Boomhower said, SCANA and Santee Cooper "established independent oversight and focused improvement initiatives on the project. Although the project continued to have challenges, those actions did result in improvement."

Boomhower also said the utility felt it necessary to keep the full report secret due to ongoing litigation over the plant failure and that "SCE&G intends to use the proceeds of any recovery in the Westinghouse bankruptcy proceedings to mitigate the impact of the abandonment of the new nuclear project on SCE&G's customers," adding that SCANA presumes Santee Cooper would act likewise.

The project was already years behind schedule and billions over budget when Westinghouse declared bankruptcy in March, voiding a fixed-price contract negotiated in 2015 to limit costs to $14 billion. Utility executives, who had already jointly spent nearly $10 billion, said they were forced to give up after determining the price tag for completing the project, budgeted at $11 billion in 2008, had soared beyond $20 billion.

SCANA officials have said the company heavily guarded the report's release because the utilities hired Bechtel in anticipation of suing Westinghouse, which designed the reactors and was lead contractor on the project.

The post-bankruptcy-analysis also concluded both reactors could not be operational until 2024. Utility customers have paid more than $ 2 billion on the failed project through rate hikes since 2009. The companies don't expect to refund anything, and customers could end up paying off that debt over decades.

While the utility executives blamed Westinghouse, senators said the utilities have known for years that problems existed yet failed to change course.

Last month, Santee Cooper officials testified the project never had a detailed construction schedule, with state regulators approving expansions based on "generic" schedules not specific to the site. Utility executives said they tried unsuccessfully for years to get a full schedule from Westinghouse, which owns the technology for reactors not previously built in the United States, but instead were given six months of plans at a time, which would inevitably have to be rescheduled.

State officials have said schedules did exist but were never followed. SCE&G updated their budget and timetable each quarter, giving regulators "no lawful way" to deny a rate hike request, Duke Scott of the Office of Regulatory Staff testified last month.

Lonnie Carter, recently retired as Santee Cooper's CEO, told senators his utility first "raised concerns" about the project in 2013, causing the utilities to hire Bechtel for the independent analysis.

At least three lawsuits have been filed over the failed project, with plaintiffs accusing the utilities of mismanagement and seeking some sort of compensation for fronting the failed projects for years.

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Kinnard can be reached at http://twitter.com/MegKinnardAP. Read more of her work at http://bigstory.ap.org/content/meg-kinnard/

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