SCE&G will buy an additional 5 percent ownership stake from partner Santee Cooper in the two new nuclear reactors under construction at the V.C. Summer Nuclear Station in Jenkinsville, north of Columbia, the utility said Monday.
The roughly $500 million purchase, approved by the Santee Cooper Board of Directors, gives S.C. Electric & Gas a 60 percent ownership stake in the two new reactors and reduces Santee Cooper’s ownership to 40 percent. The price tag for the project to build the two reactors is about $10 billion.
The sale also halted negotiations of a possible sale to North Carolina energy giant Duke Energy, after the three entities — SCE&G, Duke Energy and Santee Cooper — were unable to reach a deal and discussions broke down within the past couple of weeks, Santee Cooper spokeswoman Mollie Gore said Monday.
Santee Cooper had been pedaling a sale of 5 percent to 10 percent of its then-45 percent ownership stake in the new reactors since 2011, it said, citing financial burdens the cost of construction placed on the state-owned utility and its falling energy capacity needs.
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The agreement announced Monday forbids Santee Cooper from the further sale of any of its ownership in the Summer plant reactors until their construction is complete, which now is projected to be in 2018 for the Unit 2 reactor and 2019 for the Unit 3.
The $500 million price tag for the 5 percent additional stake by SCE&G is based on the project’s current cost, SCE&G said. The additional capacity will help replace energy generated by coal-fired plants and will reduce the need for the utility to build new gas-fired plants, the company said.
A sale to Duke Energy by Santee Cooper had been widely speculated, since both the Charlotte-based utility and the state-owned utility headquartered in Moncks Corner have for months acknowledged discussions were ongoing.
Santee Cooper said in August it had engaged over the past three years in negotiations with utilities in Florida, Ohio and Mississippi over a possible sale of some, or all, of its 45 percent stake in the Summer reactors, but that those prospective deals all had fallen through, leaving Duke Energy as the only bidder.
Environmentalists had hoped Duke would abandon its plans to add two reactors at its Lee Nuclear Station in Cherokee County beginning in about two years, and find the added capacity it might need from a V.C. Summer partnership with SCE&G.
But that was not to be.
“SCE&G and Duke (have) been working hard through these negotiations on a resolution that would work for all of us,” Gore said. “Ultimately, we were not able to come to terms and ended up walking away.”
But Santee Cooper said the SCE&G purchase allows the utility to meet the goals it needed, including lessening the financial burden immediately on their customers, while allowing it to hold on to enough of an ownership stake in the Summer venture to be viable in terms of energy capacity needs and ownership goals.
Santee Cooper previously said it wanted to get down to about a 20-25 percent ownership stake in the two new reactors at Summer.
“We think this is an excellent solution to balancing near-term and long-term goals,” Gore said. “We think this is a good place for customers and for our long-term generating goals.”Santee Cooper’s power needs have changed since it undertook the nuclear project with SCE&G. U.S. power consumption patterns have dropped amid a tough recession, U.S. natural gas supplies have risen sharply, and import fuel costs have moderated.
Santee Cooper’s plight darkened even more last year when its largest customers, the state’s electric cooperatives, began buying a quarter of the power they need from Duke Energy, further lowering demands on the state utility.
“The past few years have shown unprecedented volatility in base load fuel costs and increasing regulatory pressures on fossil-fueled generation. Today’s action reduces our costs to customers somewhat, while still preserving an ownership level that will position us well for the flexibility we will need going forward,” said Lonnie Carter, Santee Cooper president and CEO.