The objection raised most frequently when it comes to a Green New Deal is its cost. It’s preposterous; it’s too expensive; we just can’t afford it.
But before scoffing at the prospect of the wealthiest nation in the history of the world funding such a project, it’s worth taking a look at what one of the country’s poorest states was recently able to spend.
South Carolina, in a bid to expand its generation of nuclear power in recent years, dropped $9 billion on a single project — and has nothing to show for it.
The boondoggle, which was covered widely in the Palmetto State press but got little attention nationally, sheds light on just how much money is genuinely available for an industrial-level energy transformation, if only the political will were there.
There are no firm figures tied to a Green New Deal, but former Green Party presidential candidate Jill Stein’s proposed version of the project would have cost between $700 billion and $1 trillion. The new plan, being crafted with the help of progressive groups like the Sunrise Movement and pushed to the top of the House legislative agenda by Alexandria Ocasio-Cortez and other progressives, promises more substantial change on a much shorter schedule. In addition to moving the U.S. to 100 percent renewable energy in 10 years, upgrading all residential and industrial buildings for energy efficiency, and eliminating greenhouse gases from manufacturing and agriculture, it includes a jobs guarantee and a recognition of the rights of tribal nations. Ocasio-Cortez and Massachusetts Sen. Ed Markey are planning to introduce legislation for the plan this week, Axios reported.
In South Carolina, lawmakers greenlighted a multibillion-dollar energy project and stuck utility customers with the tab. “In the private sector,” former Nuclear Regulatory Commissioner Gregory Jaczko told The Intercept, “you would never be able to justify this.”
The saga, and related nuclear project failures, calls into question the role of new nuclear energy production in the effort to decarbonize the economy. New plants, Jaczko said, take too long to build for the urgency of the climate crisis and simply aren’t cost effective, given advances in renewable energy. “I don’t see nuclear as a solution to climate change,” Jaczko said. “It’s too expensive, and would take too long if it could even be deployed. There are cheaper, better alternatives. And even better alternatives that are getting cheaper, faster.”
The Nuclear Boondoggle
It started in 2008. SCE&G and Santee Cooper announced plans to add two nuclear reactors to the V.C. Summer Nuclear Station in Jenkinsville, South Carolina, and contracted Westinghouse Electric Company, owned by Toshiba, to handle construction. The state’s Public Service Commission (PSC) approved the plan in early 2009, with construction slated to begin in 2012, and the first reactor set to begin operating in 2016.
In late 2011, SCE&G announced the project’s first delay in a quarterly report to the Office of Regulatory Staff, which represents utilities in front of the PSC, citing “module redesign, production issues, manpower issues and Quality Assurance and Quality Control (QA/QC) issues.” The company estimated an 11-month setback and said its contractor, the Shaw Group, operating out of a facility in Louisiana, reported that the issues had been resolved. But SCE&G said they were still monitoring the situation “carefully” and considered “it to be a focus area for the project.” The Shaw facility would later face a federal probe over unrelated allegations that workers broke protocol and falsified records, which employees admitted to.
The company alerted more delays in mid-2013, citing manufacturing issues. Soon, Santee Cooper asked SCE&G to bring in another company to manage the project. Not long after that, both companies announced the project would cost $1.2 billion more than they’d expected. Again, they pushed back the project’s completion date.
Documents released as the project unraveled show that both SCE&G and Santee Cooper were well aware of shortcomings, mismanagement, and lack of oversight that eventually made the reactors impossible to complete, years before Westinghouse declared bankruptcy and both companies pulled out.
“They were allowed to charge the customers for all the money that they spent, plus a return,” Jaczko explained. “Even though they failed to deliver the project.”
Only 48 percent of South Carolinians know about the failed program, according to an October statewide poll surveying electric ratepayers.
“The utilities are incredibly powerful political lobbies in the state,” Jaczko said. “It’s now $2.3 billion that they’re gonna be able to get,” he said, and that doesn’t include the rate of return Dominion says it’s entitled to.
“It’s insane for a project that’s done nothing, and never will. And is just a giant hole in the ground,” he said. “Well, a filled-in hole now, at this point.”
Left With the Tab
Thanks to a state law passed in 2007, residents in South Carolina are footing the bill for a massive failed nuclear reactor program that cost a total of $9 billion. Analysts say that corporate mismanagement and poor oversight means residents and their families will be paying for that failed energy program — which never produced a watt of energy — for the next 20 years or more.
South Carolina Attorney General Alan Wilson has since called parts of the law, the Base Load Review Act, “constitutionally suspect,” and state senators have voted to overturn it — but that wouldn’t necessarily get ratepayers off the hook for paying for the failed project.
Both the Justice Department and the Securities and Exchange Commission opened separate investigations into the failed project, and at least 19 lawsuits have been filed against one company involved.
The two South Carolina companies, South Carolina Electric & Gas and Santee Cooper, a state-owned utility, spent $9 billion on a plan to build two nuclear reactors and eventually canceled it due to a series of cost miscalculations and corporate buyouts that left one construction company bankrupt and sent shockwaves all the way to Japanese tech giant Toshiba.
Dominion Energy, an energy giant in the region, has since bought out SCE&G’s parent company, SCANA Corp., for $7.9 billion — almost the entire cost of the failed project — pledged to partially refund ratepayers and cut electricity rates, which SCE&G hiked at least nine times throughout the project’s first eight years in order to pay for it.
When asked about the failed project, South Carolina Republican Rep. William Timmons laughed. He said ratepayers would still pay “a substantial portion” of the bill. “The SCANA portion, which is — approximately half has been substantially dealt with, with their restructuring and the purchase of Dominion,” he told The Intercept. “What’s left now is the Santee Cooper portion, and I think that’s still yet to be decided.”
“It is a major issue that the legislature’s dealing with,” Timmons said. The congressman didn’t have any updates on how or when the remainder of the bill would resolved.
After Dominion bought out SCANA and settled their portion of the bill, ratepayers are still responsible for about $2.3 billion. “For nothing, they get nothing,” Jaczko told The Intercept.
“They basically pay money up front for a project that never materialized, and now are still gonna be asked to pay for it. And that is a significant break from the way that traditional rate recovery used to work,” he said.
“It used to be that you didn’t start charging for a plant unless it was done and operating. Whether it was a nuclear plant, or a coal plant, or any other kind of thing.”
But because nuclear power involves heavier upfront capital costs and financing charges, Jaczko explained, states looking to revive nuclear power tried to bypass those extra costs by passing laws allowing companies to save money by recovering the cost of financing the projects during the period of construction.
“Even the law that was written in South Carolina envisioned the fact that the project could get canceled. But of course everybody promised that that wouldn’t happen,” Jaczko said.
Sen. Tim Scott told The Intercept that it was hard to pin the blame for the disastrous project on any one entity. “But certainly the Westinghouse bid coming back three times higher than their original estimation made the likelihood of success challenging. And then all the decisions that were made pending that being an accurate price all fell apart,” he said. He did not answer a question of whether ratepayers would have to pay $2.3 billion for nothing.
For conservatives and corporate-friendly Democrats, the idea of spending absurd amounts of money on a comprehensive national plan to wean the economy off dirty energy and create sustainable jobs is out of the question. It’s an idea much easier to swallow when its stated purpose is corporate profit, as in South Carolina. Or at the federal level, national defense. President Donald Trump signed into law last summer a $717 billion defense bill, up from $600 billion in 2016, and around $300 billion in 2000. In December the president tweeted that U.S. military spending was “Crazy!”
For scale, the national deficit for fiscal year 2019 is just shy of $1 trillion. Of the $4.4 trillion federal budget, military spending across agencies makes up close to $800 billion. The federal government spent about $1.1 trillion on health care in 2018. The latest government shutdown cost the U.S. an estimated $11 billion, the Congressional Budget Office reported. Trump requested $5.7 billion for a border wall, and Republicans in the House found it.
But $9 billion and zero nuclear reactors later, ratepayers in South Carolina have no say after their legislators played with the state’s resources and lost. If one state can throw away $9 billion on a project that never happened, legislators in Washington will have a difficult time claiming that they can’t find federal dollars to finance a plan that 81 percent of registered voters support.
“We can pay for a Green New Deal in the same way we pay for — whether it’s wars, or tax cuts, or any of the other great social programs that we have,” Greg Carlock told The Intercept. He’s a senior adviser at Data for Progress, where he authored a report outlining policy proposals for the Green New Deal. Unlike Ocasio-Cortez, Carlock says he disagrees with the argument that you have to tax the wealthy, or the middle class, to pay for a Green New Deal. Instead, he argues, Congress should just authorize new spending, like it does for everything else.
“There has been a really well-crafted narrative to bring up fears about deficit spending and the debt,” Carlock said. “I think that we, one, have to just break out of this fear that somehow this number that we call debt is a bad thing. Because it’s not the same kind of debt that a household has, or that a business has,” he said.
“The driver of inflation is not how many ones and zeros we’ve put out there,” Carlock said. “The driver of inflation is the availability of limited biophysical resources that that money is trying to go out and buy. And that’s why, when you think about this from a sustainability perspective, a Green New Deal that tries to improve the sustainability of our natural resources, is actually meant as a deflationary role.”
“The greatest threat to our economy and inflation is not the debt, it’s the climate crisis,” he added, “which will put an even greater strain on our resources. The whole point of a Green New Deal is to mitigate those threats, and it will be cheaper than the cost of future climate disasters.”
Investing in clean energy, sustainable jobs, and a basic standard of health care would actually save money in the long run — tens to hundreds of billions of dollars per year, according to a climate assessment released under the Trump administration this year. The argument that the money isn’t there just doesn’t hold up.
“Any politician whose first question about the Green New Deal is how to pay for it isn’t taking seriously the millions who will die if we fail to take action on the scale scientists say we need,” Stephen Hanlon, communications director for the Sunrise Movement, said in a statement to The Intercept.
“What we are talking about is a putting millions of people to work so they can buy food for their families, etc. This is the greatest investment in the American economy in generations, and that kind of investment pays substantial dividends,” Hanlon said.
“We will pay for this the same way we paid for the WWII (sic) and the original New Deal: deciding it’s a priority as a nation and that we can’t afford not to take action.”
Meanwhile, a $28 billion nuclear project in Georgia is headed for a similar fate.