Santee Cooper eyes rate hikes, extends deadline for ailing nuclear power project
PINOPOLIS — Santee Cooper is proposing two rate increases that would raise its customers’ monthly electric bills by an average of $12.30 by 2019, largely to cover financing costs for reactors at a Midlands nuclear plant that might not get built.
The utility’s board of directors on Monday approved a series of public hearings to be held this summer in advance of a December vote on the higher rates which, if approved, would take effect on April 1 in 2018 and 2019.
More than half of the rate hike would go toward reactors at the V.C. Summer Nuclear Station near Jenkinsville.
That project is in doubt since lead contractor Westinghouse Electric Co. filed for bankruptcy protection in March. Moncks Corner-based Santee Cooper, which owns 45 percent of the project, and South Carolina Electric & Gas, which owns the rest, have been paying for construction at the site since the bankruptcy filing while they decide whether to move forward with construction of one or both reactors or to scrap the project entirely.
An agreement with Westinghouse to allow construction was set to expire on Monday, but Santee Cooper’s board voted to extend it by another 45 days to Aug. 10. The board of directors for Cayce-based SCANA Corp., parent company to SCE&G, also approved a 45-day extension during a separate meeting on Monday. The extension has to be approved by the bankruptcy court, but that is expected to be a formality.
Along with the extension, Santee Cooper’s board authorized the utility to spend another $50 million on construction during the 45-day period. The board previously approved spending $250 million on interim construction, but Santee Cooper officials said Monday they have only spent $198.5 million of that amount.
Lonnie Carter, president and CEO of Santee Cooper, said the $200 million represents Santee Cooper’s 45 percent share. That means SCE&G has spent roughly $250 million more for reactors neither utility has determined will be worth their ultimate cost. SCE&G has not publicly disclosed how much money it is spending during the interim period.
Westinghouse was supposed to provide the utilities with detailed construction information for the reactors, but Carter said the contractor never turned over sufficient data.
“I was very disappointed in the quality of the information that we found over at Westinghouse,” Carter said, adding that Santee Cooper has had to go to third parties to get information that should have come from the lead contractor. While the utilities didn’t start from scratch in compiling a detailed construction schedule, Carter said “we weren’t far from scratch.”
“Hopefully we’re nearing the end,” he said, adding a decision could come before the end of the 45-day period.
“We’ll ask staff to move as quickly as possible to get the information needed and come to a resolution of this important issue,” said Santee Cooper board chairman Leighton Lord, calling on the utility to “spend as little money as possible and get it done as quickly as possible.”
Until a detailed schedule is completed, Santee Cooper and SCE&G have no way of knowing exactly how long the two reactors will take to build and how much they will cost. Westinghouse has said the project could be finished by the end of 2020 and at a $14 billion price tag, but those statements were made before it became clear the contractor had no detailed construction schedule — called a resource loaded schedule — on which to base its estimates.
Carter declined to say how much he thinks the reactors might cost. Analysts have said the price could balloon past $20 billion. The project is already years behind schedule and about $3 billion over its initial budget.
Consultants for a similar project in Georgia, where Westinghouse was supposed to build two reactors, said this month that project “is no longer economic to complete” because its estimated cost has soared to $29 billion.
Construction of both projects is only about 40 percent complete.
The proposed rate increases that Santee Cooper’s board agreed on Monday to consider would not cover any additional costs at V.C. Summer. Instead, the increases are needed to help cover financing costs for about $4 billion the utility has already spend. That’s on top of about $4.9 billion that SCE&G has spent to date.
If approved, the rate hikes would be the sixth and seventh for Santee Cooper customers since V.C. Summer started construction in 2009. Most recently, Santee Cooper raised rates by 3.7 percent in both 2016 and this year to help pay for the reactors.
The proposal calls for a 3.5 percent rate increase in 2018 followed by a 3.9 percent increase the following year. If approved, the average residential customer’s monthly bill would rise to $127.60 in 2018 and $135.80 the following year.