September 9, 2015
By Eva Moore
Regulators have approved yet another cost overrun and construction delay for the two nuclear power plants that SCE&G is building in Jenkinsville, about 25 miles northwest of Columbia.
And because of a South Carolina law called the Base Load Review Act, the cost overrun will once again be passed on to the utility’s current customers.
Under a settlement approved last week by the state Public Service Commission, SCE&G can increase by $1.1 billion the amount it’s spending on two nuclear reactors at the V.C. Summer nuclear site. SCE&G and Santee Cooper are partnering on the project.
This was the fourth revision SCE&G has made to its cost projections and construction schedule since it won approval to build the units in 2009.
Meanwhile, a rate hike related to financing costs of the nuclear project [online copy corrected] is pending. It will come over the objections of AARP and the South Carolina Small Business Chamber of Commerce, which both protested the way SCE&G is funding the construction.
It’s somewhat unusual that SCE&G customers are financing the cost of the nuclear plants up front — but that’s exactly what the 2007 Base Load Review Act allows. (A more common model would be for shareholders, rather than ratepayers, to bear the risks and costs of financing capital projects, according to a 2013 paper by Mark Cooper, a senior fellow for economic analysis at Vermont Law School’s Institute for Energy and the Environment.)
SCE&G, though, has described the Base Load Review Act as a more cost-effective financing model because it’s a pay-as-you-go method. An SCE&G spokesman told The Post and Courier last month this financing model would lower the cost of building the two reactors by $1 billion and “ultimately will save consumers about $4 billion in electric rates over the life of the units.”
Tom Clements, director of Savannah River Site Watch, calls the South Carolina law “unjust” and “anti-consumer.”
“This law was a collusion between the utilities and legislature designed to be a give-away to nuclear utilities and to be against the customers, who bear 100 percent of costs and all the risks and own nothing when the project is complete,” Clements says. “If the nuclear project was competitive, this law would not have been necessary.”
Although the Public Service Commission has approved the schedule and cost adjustment, it has yet to approve SCE&G’s annual rate hike request, which is still pending. The company has requested a 2.8 percent rate increase for residential customers — a total increase of $69,648,000, according to the PSC. It’ll be the eighth request for a rate hike to build the reactors.
The agency must issue a decision on the rate hike by the end of September.
Completion of the reactors is now delayed by three years, to June 2019 and June 2020.
In a news release in March, SCE&G blamed the cost overruns and construction delays on two companies building submodules for the plant: Westinghouse and Chicago Bridge & Iron. (The companies have disputed that they are responsible, according to Charlotte Business Journal.)
“These delays and related cost increases are principally due to design and fabrication issues associated with the production of submodules used in construction of the units,” said SCANA Chairman and CEO Kevin Marsh. “Despite these challenges, we remain firmly committed to completing these plants that will bring clean, safe, and reliable electricity to meet the long-term energy needs of South Carolina.”