Dive Brief:
- SCANA Corp. subsidiary South Carolina Gas & Electric has proposed a slate of rate changes and new generation investments following the V.C. Summer nuclear development debacle, including lower rates, new gas and solar generation, and other accounting moves the company says will benefit ratepayers to the tune of $4.8 billion.
- The utility says shareholders will absorb $2 billion in costs for the cancelled reactors, but it will continue to charge customers for the remaining cost over the next 50 years. South Carolina lawmakers have pressed for the utility to eat the entire $9 billion pricetag for the abandoned plant.
- The new proposal follows revelations that SCANA may be unable to recover more than $200 million in costs associated with the abandoned nuclear project, instead absorbing them within the company. It also comes less than three weeks after the utility announced sweeping management changes that included the retirement of Chairman and CEO Kevin Marsh.
Dive Insight:
Following cancellation of the V.C. Summer project, officials at SCANA are proposing to lower customer rates while developing a plan to replace the project's capacity.
Yesterday, the utility company said it had developed a "comprehensive solution to outstanding issues" that would ultimately provide approximately almost $5 billion in benefits to SCE&G customers. The plan includes a rollback of residential electric rates to where they would have been in March 2015. The utility estimates that would result in an immediate annual reduction to rates by approximately $90 million, or 3.5%.
SCANA shareholders "will absorb the net nuclear construction costs through lower earnings over 50 years," the utility said. That would leave the average SCE&G customer still paying about $25 per month for the cancelled reactors, the Post and Courier notes, allowing the utility to collect $29.5 million per month.
The company is also proposing the addition of a 540 MW gas-fired power plant, which would replace more than 40% of the projected power that was to be provided to SCE&G from the V.C. Summer nuclear construction project. Along with more gas-fired generation the utility would add about 100 MW of large-scale solar energy, representing an approximate 50% increase in non-rooftop solar capacity.
"We've heard our customers' frustrations about paying for a power plant and having nothing to show for it," said Keller Kissam, the current SCE&G president of retail operations. Kissam will become the utility's president and COO at the beginning of next year.
According to SCANA CFO Jimmy Addison, who will become its CEO next year, current projections "indicate that if this proposal is adopted, we would not need an additional generation source for several years. This is a key step to meeting South Carolina's robust economic growth."
SCE&G owns 55% of its abandoned two-reactor expansion project at the VC Summer plant, along with partner Santee Cooper. Proposed in 2008, the expansion was supposed to cost less than $12 billion. But SCANA and Santee Cooper abandoned the project over the summer, already having spent $9 billion. They said completing construction would take years and costs could spiral to $25 billion.
