August 12, 2014

SCE&G nuclear plants facing more delays, cost overruns

New plants likely will not be operational until 2019, 2020; utility will have to seek approval from state regulators on new schedule.

Two nuclear reactors under construction in Fairfield County are facing another significant delay, utility provider S.C. Electric & Gas confirmed.

The delay will put the $10 billion project at V.C. Summer Nuclear Power plant outside the 18-month contingency allowed by state regulators and likely will drive up the costs, but utility officials said they would not know how much until later this year.

The first new reactor will go online between late 2018 and mid-2019, with the second new reactor going online a year later, officials said. The plants originally were set to begin operating in 2016 and 2018 and already had been delayed a year ago.

Under conditions of the state’s Baseload Review Act, SCE&G also will have to go back before the S.C. Public Service Commission to get approval of a new construction schedule and likely to seek more money, according to Dukes Scott, PSC spokesman.

SCE&G, which is building the plants with state-owned utility Santee Cooper and has a 55 percent stake in the project, won regulatory approval to raise rates annually for its current customers to help pay for the construction of the nuclear power plants. SCE&G ratepayers already have ponied up numerous increases for the nuclear project, the latest one approved in May.

“We have warned from the start of this risky project that it would face significant delays and cost increases, so there is unfortunately no big surprise in SCE&G’s stunning news,” said Tom Clements, director of Savannah River Site Watch (SRS Watch). “SCE&G ratepayers, already facing seven rate increases to pay in advance for the nuclear project, will likely take it on the chin by the cost increases due to the announced delays.”

SCANA, parent company of SCE&G, disclosed the newest Summer delay in an afternoon conference call with investors.

The setbacks stem from a delay in fabrication and delivery of modules from Chicago Bridge & Iron out of Lake Charles, La., SCE&G officials said. They said 100 out of 146 project milestones have been completed, but many of them are being delayed because of a large structural module called a CAO1 that has not been delivered by CB&I.

SCE&G officials said as many as half of the construction milestones could fall outside the 18-month construction window allowed by state regulators under the existing Summer guidelines.

The delay revealed last year was estimated by SCE&G to cost about $278 million. In April, the S.C. Energy Users Committee and the Sierra Club took SCE&G to the Supreme Court asking that those cost delays be borne by SCE&G, not ratepayers, after the PSC ruled the charges could be passed off to the public.

The Supreme Court has not ruled in the case yet.

The expected cost of the latest Summer nuclear plant construction delay could be $500 million, according to Savannah River Site Watch, an anti-nuclear watchdog group that closely follows nuclear issues in South Carolina and elsewhere.

SCE&G officials said they will not know the amount of the cost overruns until they complete negotiations with the consortium building the plants. They expect to reveal those costs by the end of the year.

It is not clear how additional costs from this delay will be handled – that is, whether all or part of the costs will be passed on to ratepayers, or whether SCE&G’s investors will be forced to absorb the losses, or if the construction consortium will have to pay.

Watchdog groups sought to deter the addition of new nuclear reactors at V.C. Summer in 2008 before construction began, arguing conservation, alternative energy and efficiency should first be exhausted for adding new power capacity before more dangerous and costly nuclear options.

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