SCE&G Announces Settlement on Construction and Capital Cost Schedules for New Nuclear Units
South Carolina Electric & Gas (SCE&G) announced on September 1 that it had entered into a settlement agreement related to its original petition (Docket No. 2000-366-A) to the South Carolina Public Service Commission (PSC) to increase the cost of constructing its two nuclear plants at the V.C. Summer Station in Jenkinsville by $846 million and to raise overall electricity rates by 3.06 percent to pay for construction financing costs of the plants.
The filing had met with strong pushback. On July 18, representatives of numerous advocacy groups met at the South Carolina State House to announce the formation of a new coalition, called “Stop the Blank Check.”
The coalition advocated for legislative changes to the Palmetto State’s Base Load Review Act, which they claim has enabled the nuclear plants to go “well over budget, three years behind schedule, and [become] very costly to SCE&G customers.”
Under the terms of the new pact – with the South Carolina Office of Regulatory Staff, the Central Electric Power Cooperative, the Electric Cooperatives of South Carolina, Frank Knapp, Jr., and the South Carolina Energy Users Committee – the utility and its engineering, procurement, and construction (EPC) partner, Westinghouse Electric, will substantially complete construction in August 2019 and August 2020 for Units 2 and 3, respectively; and will receive an extra $831 million in the capital cost schedule.
The deal calls for the update of SCE&G’s Fixed Price Option, as included in the October 2015 Amendment to its EPC agreement with Westinghouse.
In addition to supporting approval of the Fixed Price Option and the revised construction and capital cost schedules, the settling parties agreed to revise the allowed Return on Equity (ROE) for the new nuclear project from 10.50 percent to 10.25 percent.
Under the Base Load Review Act, the revised ROE will be applied prospectively for the purpose of calculating revised rates sought on and after January 1, 2017, until such time as the new nuclear units are completed.
What’s more, SCE&G agreed that it will not file future requests to amend capital cost schedules prior to January 28, 2019.
“The coalition members agree that our members and constituencies we serve don’t want to pay any more than necessary for constructing the nuclear plants,” commented Frank Knapp Jr., CEO of the South Carolina Small Business Chamber of Commerce, adding, that without changes, “The Base Load Review Act has turned into a blank check for SCE&G and will be so for future utilities that want to use it. “
The settlement agreement is subject to approval by the Public Service Commission of South Carolina (PSC). If the PSC approves the settlement agreement in its entirety, none of the settling parties may appeal the PSC’s decision.
A public hearing on SCE&G’s petition is scheduled to begin on October 4.
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