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Utility CEO retiring following failure of nuclear project

Posted August 25

— The CEO of South Carolina's state-owned utility is retiring, making him the first executive to leave following last month's abandonment of a nuclear power project that customers have been funding since 2009.

Lonnie Carter, Santee Cooper's CEO since 2004, announced his resignation Friday after 35 years with the public utility.

Carter had been eligible for retirement for years, but he had been asked to remain until the project's completion. He told board members last week of his intentions. Carter was not asked to leave, and no other executive departures are expected, said board Chairman Leighton Lord.

Carter, 58, will stay in his job for the next several weeks, until the board names an interim replacement, Lord said.

Carter pledges to participate in legislative hearings into why the public utility and privately owned South Carolina Electric & Gas decided July 31 to bail on the expansion of V.C. Summer Nuclear Station in Fairfield County after jointly spending nearly $10 billion.

"I'm particularly proud our board had the courage to adjust or change decisions when circumstances change, always seeking to do the right thing for our customers," Carter told board members after a closed-door session.

Carter's salary is $541,000. His $330,500 bonus last year was tied to corporate goals such as power costs, safety and customer satisfaction, according to the utility. A spokeswoman could not immediately provide Carter's retirement package.

The nuclear project's abrupt end left about 6,000 people jobless and brought a backlash from lawmakers and customers, who have spent about $2 billion on the project through a series of rate hikes. More than half a billion of that came from Santee Cooper customers.

Legislative panels created to investigate the debacle started meeting Tuesday.

On Friday, Santee Cooper's board unanimously approved a resolution praising Carter's service.

Carter was instrumental in negotiating deals that brought Volvo and other companies to South Carolina, Lord said. Customers of Santee Cooper, the state's lowest-cost energy provider, include the state's largest industries.

Santee Cooper owns 45 percent of the scuttled nuclear project.

Carter and executives for SCANA, SCE&G's parent company, have repeatedly blamed lead contractor Westinghouse for its failure. Westinghouse declared bankruptcy in March, voiding fixed-price contracts negotiated in 2015 to control escalating costs. Utility executives contend they were forced to give up after a post-bankruptcy-analysis determined the price tag for completing the project — budgeted at $11 billion in 2008 and last approved by state regulators at $14 billion — had actually soared beyond $20 billion.

Santee Cooper would have had to increase customers' rates by more than 40 percent, Carter said.

Testimony at this week's hearings showed the project never had a detailed construction schedule. State regulators approved the expansion in 2009 with a "generic" schedule 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 a reactor design not previously built in the United States.

Instead, they got a "six-month look-ahead schedule," Carter said. "They'd stray off of them in four to six weeks and have to reschedule."

Carter told senators his utility first "raised concerns" about the project in 2013, causing the utilities to pay for an independent analysis of the project's status. Lord said the utility's refusal to pay Westinghouse for progress it wasn't making ultimately led to the fixed-price contract.

Senators indicated Tuesday they were tired of the finger-pointing.

"We can sit here and blame Westinghouse all day," said Senate Majority Leader Shane Massey, R-Edgefield. "But at some point, y'all, we can't pass the buck anymore. There's got to be some responsibility for both Santee Cooper and SCANA on this."

A permanent replacement for Carter will likely be named by next summer, Lord said.

Santee Cooper, one of the nation's largest public utilities, is the source of electricity for about 2 million people across South Carolina. It directly sells power to nearly 177,000 customers in Berkeley, Georgetown and Horry counties, as well as 26 large industrial customers, including Joint Base Charleston. It also provides electricity to the state's 20 electric cooperatives and a dozen municipal utilities.

Also on Friday, Duke Energy announced it would not build a proposed nuclear plant elsewhere in South Carolina. The utility based in Charlotte, North Carolina, obtained its federal license last December for the same design as the partly built reactors at V.C. Summer. That utility has spent $542 million over the last decade on land, site preparation, permitting and plans for two reactors it won't build. A spokesman said the utility has not determined how much it will seek to recoup from South Carolina customers.

The utility ended all speculation that it might take over the V.C. Summer project to complete either of those reactors.

"We've looked at this option for every angle we can, and we've concluded it's not feasible," said spokesman Jeff Brooks.

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