On Heels of Obama Nuclear Bailout, Challenge to Controversial South Carolina Nuclear Project to Be Heard by State's Supreme Court on March 4

In a case that could have far-reaching implications for efforts to build new nuclear reactors in the U.S., the South Carolina Supreme Court has set a hearing date on a challenge against a new reactor project planned in the state.

The March 4 hearing at the state Supreme Court in Columbia will consider the appeal by the environmental organization Friends of the Earth of a decision by the South Carolina Public Service Commission allowing South Carolina Electric & Gas (SCE&G) to proceed with a costly two-reactor nuclear project and to begin collecting rates to pay for it.

SCE&G's reactor project is widely considered to be on the Department of Energy's short list of four projects being considered for a federally subsidized "loan guarantee." Friends of the Earth and a host of other public interest groups believe that loan guarantees constitute unwarranted giveaways to an industry which should be forced to compete in the free market and not depend on taxpayer bailouts.

"The nuclear project as proposed by SCE&G is flawed on many levels and as the state Public Service Commission allowed it to go forward, we were obligated to watch out for the public interest and appeal to the Supreme Court," said Tom Clements, Southeastern Nuclear Campaign Coordinator with Friends of the Earth in Columbia. "The South Carolina law that forces the state's citizens to pay up front for nuclear reactors, even if construction is abandoned, is unjust in the extreme and must be overturned by the court. We believe that the court will balance the public interest with the interests of the company and the energy future of the state and direct SCE&G to conduct a more thorough costs analysis and review alternatives to the project, beginning with an aggressive conservation and efficiency program."

Friends of the Earth claims in its appeal that the state's Public Service Commission erred in its February 2009 decision allowing the project to go forward by not adequately requiring SCE&G to present energy alternatives and by not fully considering the cost of the project. The appeal also challenges aspects of a South Carolina law, the Baseload Review Act, that forces rate payers to pay for the nuclear project far in advance of its operation and also in the event the project is cancelled mid-stream. Friends of the Earth claims that this "construction work in progress" law is unconstitutional as it forces rate payers to pay for something they may never receive.

Friends of the Earth has claimed that the Public Service Commission gave SCE&G a "blank check" for the project's costs as SCE&G did not provide the Public Service Commission with a cost of electricity coming for the reactors nor guarantee a final cost for the project. SCE&G claimed in the hearing on the reactor project that the two reactors will cost $11.5 billion, but the company had previously filed a $9.8 billion cost with the Securities and Exchange Commission. Georgia Power, which also aims to build two AP1000 reactors, has said those reactors are likely to reach a cost of $14 billion. On February 2, Nuclear Regulatory Commissioner Greg Jaczko stated in an Arizona Republic article that "the best estimate for a new reactor's price tag is about $10 billion."

The two Westinghouse AP1000 reactors that SCE&G intends to build have yet to be certified or receive a license from the Nuclear Regulatory Commission, and are now undergoing redesign of the "shield building" that covers the reactor containment. Due to this serious matter, no established review schedule exists for the design, meaning more delays in the licensing decision or a rejection of the design by the Nuclear Regulatory Commission.

In addition to SCE&G, the state's Office of Regulatory Staff, which Friends of the Earth alleges has abrogated its responsibility to look out for the interest of rate payers, is also a target of the appeal.

A second challenge has also been mounted against the Public Service Commission decision, by the S.C. Energy Users Committee, an association of large electricity users in the state. No hearing date for that appeal has been set and the court declined to combine the two appeals.

Tom Clements will be available for comment before and after the hearing and Bob Guild, Friends of the Earth's attorney and a well-known environmental lawyer in South Carolina, will be available after the hearing has concluded.