The Public Service Commission of South Carolina (SCPSC) voted unanimously to approve South Carolina Electric & Gas Company’s (SCE&G), principal subsidiary of SCANA Corporation petition to update the construction milestone schedule as well as the capital cost schedule for the two new nuclear units being constructed in Jenkinsville, South Carolina, SCANA announced late last week.
The construction schedule approved, without consideration of all mitigating strategies, indicates substantial completion dates of June 2019 and June 2020 for Units 2 and 3, respectively, SCANA said in a release. The delayed completion is about three years over previous estimates.
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). Also, the allowed Return on Equity (ROE) for the new nuclear project will be revised from 11 percent to 10.5 percent.
SCANA Corp. Chief Executive Officer Kevin Marsh said this spring that the delays and most of the increased costs were due to design and fabrication issues related to production of submodules. SCANA was negotiating with Westinghouse and Chicago Bridge & Iron to assign cost responsibilities related to overruns.
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 SCPSC encouraged 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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Due to the unjust CWIP law in South Carolina - Baseload Review Act - we are now facing our 8th pay-in-advance rate hike to pay for the financing costs for the SCE&G reactor project. When the 8th rate hike is approved this month by the SC PSC, our bill will be over 15% for the project. By the time the first unit comes on line, we could be facing around 25% of our bill for the new reactors. What will happen to the bill when capital costs start going into the bill? After being saddled with all costs and all risks, the rate payer will own nothing at the end of the day. What a sweet deal for SCE&G and shareholders, courtesy of the South Carolina legislature (in 2007)! Now, get ready for more cost overruns and delays and SCEG will try to put all subsequent cost overruns on the rate payer. But how long can that strategy prevail? -- Tom Clements, Savannah River Site Watch, Columbia, SC
