Published Dec. 6, 2012
South Carolina Electric & Gas probably will hold off seeking another increase in base electric rates for three years if state regulators approve the utility’s latest request, one of the company’s top executives said Wednesday.
However, that doesn’t mean rates will remain flat. The power company still will be looking for increases of 4-5% a year from 2013 through 2015 as construction costs accelerate for two reactor units at the V.C. Summer Nuclear Station.
“The next three years are peak years in the construction,” said Jimmy Addison, CFO of Cayce-based SCANA Corp., parent of SCE&G. “Accordingly, in the base electric business, our plan is to stay out of the regulatory arena for base electric cases.”
Addison, who spoke at the Wells Fargo Utility Symposium in New York, said SCE&G recently wrapped up its latest base electric rate hike request. The state Public Service Commission is expected to vote on the request Dec. 19 and issue an order by Dec. 31. New rates would go into effect Jan. 1.
SCE&G signed a memorandum of understanding with six of seven interveners agreeing to lower its base electric rate request to an average of 4.23% from 6.6%. If approved, the rate request would raise about $97 million in additional revenue, down from about $151 million that SCE&G had originally requested.
The utility, though, will seek annual rate increases to cover borrowing costs for capital needed to pay its share of construction costs for two 1,100 megawatt reactor units, costing $9.8 billion.
New nuclear capital expenditures for SCE&G will average about $1 billion a year from 2013 through 2015, Addison said.
Through August, SCE&G had spent $1.64 billion on the project. The company, which owns 55% of the new units, said its share of new nuclear construction is projected to hit $5.8 billion.
State-operated Santee Cooper is SCE&G’s partner on the project.
Since the project was green-lighted in 2009, state regulators have approved five rate hikes totaling 8.6% to cover new nuclear costs, according to commission records.
Also, SCE&G won approval from the commission for an average 4.88% general rate hike in June 2010.
The state Base Load Review Act allows the power company to see annual rate increases over the life of the project, scheduled to be completed in 2018. SCE&G estimates that the annual rate hike to cover new nuclear costs will average 2.36%.
Paying financing costs while construction is ongoing, as opposed to waiting until the project has been completed, lowers the cost of building the new units by about $1 billion, SCE&G said. SCE&G also estimates paying financing costs now will save customers $4 billion in electric rates over the life of the new units.
SCE&G serves 669,000 electric customers in South Carolina.