It's unanimous: Customers will pay for SC Electric and Gas nuclear cost overruns
South Carolina Electric & Gas Company (SCE&G), a principal subsidiary of SCANA Corporation, has received unanimous approval from the Public Service Commission of South Carolina (SCPSC) on its petition to update the construction milestone schedule as well as the capital cost schedule for the two new nuclear units being constructed at the V.C. Summer Nuclear Generating Station in Jenkinsville, South Carolina.
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V.C. Summer Nuclear Generating Station. Credit: SCANA |
The approved construction schedule indicates substantial completion dates of June 2019 and June 2020 for Units 2 and 3, respectively. The approved schedule, including these estimated completion dates, is based upon information received from Westinghouse Electric Company and Chicago Bridge & Iron (the Consortium).
The approved capital cost schedule includes incremental capital costs that total $698 million (SCE&G's portion in 2007 dollars), of which $539 million are associated with the schedule delays and other contested costs. The total project capital cost is now estimated at approximately$5.2 billion (SCE&G's portion in 2007 dollars) or $6.8 billion including escalation and allowance for funds used during construction (SCE&G's portion in future dollars).
Further, the allowed Return on Equity (ROE) for the new nuclear project will be revised from 11 percent to 10.5 percent. The revised ROE will be applied prospectively for the purpose of calculating revised rates sought by the Company under the Base Load Review Act on and after January 1, 2016, until such time as the new nuclear units are completed.
The approval by the SCPSC should not come as a huge a surprise if history is any indicator. Since 2009, the SCPSC has approved at least eight rate increases to SCE&G customers, totaling bill increases of 27.7 percent.
The SCPSC did encourage SCE&G to continue to negotiate with the Consortium and take other necessary steps to minimize delay-related costs for the benefit of SCE&G's customers.
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