Dive Brief:
- South Carolina Electric & Gas Co. (SCE&G) has informed state regulators that its share of the development of two new nuclear units has increased significantly, rising about $852 million to reach $7.7 billion.
- SCE&G and Santee Cooper have been working for years to develop the units at the existing V.C. Summer nuclear plant, but the bid has been delayed and costs continue to rise. Last year, the companies inked a deal to have Westinghouse Electric Co. come onboard in an effort to speed construction. SCE&G owns a 55% stake in the project with Santee Cooper's share totaling the remaining 45%.
- Most of the price increase resulted from SCE&G selecting a fixed-price option for reactor construction. The units are expected to be complete in 2019 and 2020.
Dive Insight:
New nuclear construction is known for its high costs, and the latest cost increase for SCE&G's proposed nuclear units underscores the hazy future for profitable operations of such new facilities.
The decision to go with a fixed-price option for development of two new nuclear units about 20 miles outside Columbia, S.C., will be a long-term gain for customers, according to leadership at SCE&G's parent company. In the short-term, however, it adds significantly to costs.
"Completing these plants is imperative to bring clean, safe, and reliable electricity to meet the long-term energy needs of South Carolina," SCANA Chairman and CEO Kevin Marsh said in a statement. "The Fixed Price Option provides substantial value to our customers, investors, and the company by limiting the risk of future cost increases.”
Marsh said that $505 million in the announced cost increases was attributable to the fixed-price option. He added that construction "continues to progress” and said Fluor Corp. "has proven to be an asset to the project team and the vast majority of the major components and equipment have been received onsite. "
Under the terms of an agreement between SCANA and Santee Cooper inked last year, Westinghouse purchased the firm which had been constructing the reactors, Stone & Webster, and replaced the company with Fluor as the construction manager.
SCE&G said its total project cost is now estimated at approximately $7.7 billion, including owner’s cost, transmission, escalation and allowance for funds used during construction.
