By Chuck Crumbo
Published May 29, 2014
S.C. Electric & Gas Co.’s share of the new reactor construction project at V.C. Summer Nuclear Station is running about $765 million below budget, according to documents filed with state regulators.
The utility, principal subsidiary of Cayce-based SCANA Corp., said that the figure is below the cost the S.C. Public Service Commission approved in November 2012, when it signed off on a change in the construction schedule.
The company’s costs are based on its existing 55% interest in the project, the documents said. However, SCE&G reported in January that it had signed an agreement with its partner Santee Cooper to increase its share to 60%.
SCANA executives have said the lower costs are largely the result of paying less to borrow money for the project, which involves the construction of two 1,117-megawatt reactor units.
Last week, the company announced it has sold $300 million worth of first mortgage bonds at an interest rate of 4.5% to cover corporate expenses, including new nuclear construction.
Credit rating agency Fitch Ratings, which assigned an A rating to the bond issue, added that a state law that allows SCE&G to seek annual, incremental rate increases during the life of the project to cover carrying costs has helped reduce the company’s borrowing risk.
The company has previously announced that it plans on Friday to seek its seventh hike in rates to cover borrowing costs since state regulators approved the project in 2009.
Through December, approximately $2.3 billion had been spent by SCE&G on the nuclear project, Fitch reported.
It added that the company’s peak spending will occur over the 2014-2015 period, aggregating $1.85 billion with a peak of about $950 million in 2015.
Initial estimates placed the project’s total cost at $9.8 billion.
Fitch’s outlook could change if there are further construction delays that push the project’s completion beyond the end of 2018 or if there is an escalation in price.
Also, any change in the state law allowing the rate increases — while not expected —could affect the ratings, Fitch said.
SCE&G has agreed to pay Santee Cooper $500 million to increase its ownership.
The increase would take place in three stages, with 1% coming at the commercial operation date of the first new nuclear unit, anticipated in late 2017 or the first quarter of 2018.
An additional 2% will be acquired no later than the first anniversary of the unit’s commercial operation date and the final 2% no later than the second anniversary of the unit’s commercial operation date.