Staff Report
Published August 10, 2010

Construction of two new nuclear reactors will not be delayed by Monday’s S.C. Supreme Court Ruling, according to South Carolina Electric & Gas.

The S.C. Supreme Court overturned one of the rate hikes granted to SCE&G to pay for its two new nuclear reactors. In a 3-2 ruling, the court found that the utility should not have been granted $438 million in increases to cover contingency costs related to the $10 billion nuclear project that it shares with Santee Cooper.

SCE&G President Kevin Marsh said: “It is important to understand that the court’s decision does not delay the actual construction of the new units. The Supreme Court’s decision does not change the Commission’s issuance of a Certificate of Environmental and Compatibility and Convenience, which is required to construct the new units.”

The projected contingency fund was less than 10% of the total project budget, according to the utility. Of the pending revised rate request before the PSC, 99.5% is unaffected, as only about $270,000 out of $47.6 million revenue requirement is related to previously designated contingency dollars.

All other portions of the Base Load Review Order remain intact, and construction of the new units is continuing as planned, SCE&G said.

“Contingencies are a normal part of major construction projects,” Marsh said. “Rather than having a pre-approved project contingency fund, this will simply require the company to go before the commission for cost updates as previously designated contingency funds are to be used. This ruling may change the steps in the regulatory process, but it should not change the outcome as long as the costs incurred are deemed prudent.”

The PSC gave SCE&G permission to raise rates gradually by a total of 37% to pay for the reactors. SCE&G has estimated that its capital costs for the two reactors will be about $4.5 billion. Santee Cooper is a partner in the project, but SCE&G is leading construction.

The PSC approved SCE&G’s application in Feb 2009 to build two new nuclear reactors at the V.C. Summer plant in Fairfield County.

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