SCE&G customers facing seventh rate increase for nuclear project

05/30/2014 10:21 PM

05/30/2014 10:22 PM

South Carolina Electric & Gas Co. customers would pay an extra $50 a year on average for their electric bills starting in October if the utility’s request for a rate hike is approved.

Under the plan, they would be paying $236 more per year in 2014 than they were in 2008 – a 37 percent increase. Consumers likely face five more years of increases to pay for two new nuclear plants under construction in Fairfield County, just north of Columbia.

The company, which has 681,000 electric customers in South Carolina, late Friday filed a request with the S.C. Public Service Commission to raise rates 2.99 percent overall to cover $70 million in construction costs for the past year at the V.C. Summer nuclear plant.

The Cayce-based energy giant – along with the state-owned utility Santee Cooper – is building two new reactors at the Summer site in Jenkinsville at a total cost of $9.8 billion. The first new 1,117-megawatt reactor is scheduled to begin power generation at the end of 2017 or beginning of 2018, with the twin Westinghouse reactor powering up 12 months later, SCE&G said.

This would be the seventh rate increase since 2009 under South Carolina’s controversial Base Load Review Act, put into effect by the General Assembly in 2006. The act allows the utility to increase rates for current customers to pay for construction of the nuclear plants before they go into operation.

If the latest request is approved, it would mean a customer using 1,000 kilowatt hours of electricity per month would pay $19.69 a month – or $236.28 per year – more starting in October than they were paying at the beginning of 2009.

The bill for the 1,000-kilowatt per month customer was about $107 each month in January 2009 and would be $146.63 under the new plan. That’s a 37 percent increase, and includes other rate hikes not related to nuclear construction. By contrast, inflation was about 10 percent for the period.

Rates will continue to climb over the next five years as construction continues on the plants.

Paying construction finance costs while the plants are being built will drop their cost by about $1 billion, the utility says, and save customers nearly $4 billion in electric rates over the life of the new plants.

Nuclear critics such as Tom Clements, Savannah River Site Watch director, complain that nuclear costs already make up more than 10 percent on an SCE&G customer’s monthly electric bill, and will go higher if more upfront finance payments are made to SCE&G.

“A seventh rate-hike request to force SCE&G customers to pay in advance for the nuclear project underscores that the project simply cannot stand in a free-market situation,” Clements said.

“If SCE&G believes its project to be sound, then it should halt consideration of a seventh rate hike and only bill customers if the project is ever finished and all the electricity (is) used by South Carolina customers.”

Clements and other nuclear watchdog groups have long contended SCE&G should more aggressively pursue energy efficiency, conservation and alternative energy sources to meet customer demand, though they charge the company has only shown “limited interest” in such approaches.

“When a glut of unneeded electricity comes on line in 2018, SCE&G could be facing a serious financial situation if it is not able to sell all of its production.”

In 2008, when SCE&G filed plans with the Public Service Commission to build new nuclear plants at Summer and begin raising rates to pay for them, it projected Base Load Review Act electric rate increases ranging from 3.29 percent in 2009, up to 4 percent in 2013, before tapering down to 1.1 percent in January 2019, when construction would be completed. At the time, the overall rate increase was projected to be 37 percent – a level already reached because of a series of additional rate increases not related to nuclear construction. Those rate increases paid for items such as federally required environmental upgrades and a backup dam at Lake Murray.

If the latest increase is approved by the S.C. Public Service Commission, electric rates would increase in October by 3.09 percent for SCE&G residential customers, or $4.34 a month based on 1,000 kilowatt hours of use.

Small- and medium-size SCE&G commercial customers would see their monthly rates increase similarly by 3.08 percent and 3.07 percent, respectively, under the rate increase request.

Meanwhile, large commercial and industrial customers would see their monthly electric bills rise by 2.70 percent, if SCE&G proposal is approved.

The commission has four months to make a decision about the increase request and the public has 30 days to comment on the request.

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