SCE&G customers shouldn’t expect a refund on the $1.4 billion they’ve paid for a nuclear reactor project the company now says it won’t complete.
A day after SCE&G said it would abandon the nuclear expansion project in Fairfield County, company officials said the amount customers are being charged for the work is already in the utility’s rate base and has been approved by utility regulators.
While the company didn’t directly answer whether it will continue to charge customers for the project that won’t be completed, a top utility executive was clear when asked if SCE&G would give people their money back.
Nuclear costs “will not be refunded,’’ Kevin Marsh, chief executive of SCE&G’s parent company, SCANA, said Tuesday after briefing the state Public Service Commission on the project shutdown.
Customers have been hit with nine rate increases to pay for the nuclear project, which translates to about 18 percent of the average person’s monthly power bill.
Whether SCE&G will cut customers a break on rates has been a point of discussion since the company revealed this week it would not complete the over-budget and behind- schedule V.C. Summer nuclear plant expansion northwest of Columbia.
The company said the project’s latest anticipated price tag, projected to be more than double early cost estimates of $11 billion, was a factor in the decision. SCE&G quit the project after its junior partner, state-owned Santee Cooper, said Monday it was pulling out because of the cost and lower projections for energy from customers. Both companies blamed Westinghouse, the project’s chief contractor that filed for banktruptcy in March, for many of the problems.
Critics of the rate increases say the public should get its money back because SCE&G didn’t deliver on its promise to build the plants. Similar demands have been made of Santee Cooper, which also does not plan refunds.
“People are furious that they are now paying and have been paying for something that will never produce electricity,’’ Sierra Club lawyer and attorney Bob Guild said, arguing that SCE&G is trying to protect stockholders’ investments at the expense of customers.
Customers like Derek Anderson of Lexington said the utility should take the 18 percent charge for the scuttled project off people's bills, the Associated Press reported..
"I was pretty infuriated," said Anderson, adding his monthly bill averages $170 for a single person in a well-insulated home.
Patrick Cobb, a spokesman for AARP in South Carolina, said many people on fixed incomes have had a difficult time paying higher power bills. Now, they won’t get what they paid for, he said. AARP has more than 600,000 members in South Carolina.
“You have reached into the pocket of the consumer so many times,’’ Cobb said of SCE&G. “There needs to be some kind of makeup or accommodation for folks. The consumer is holding the bill instead of the stockholder.’’
The Sierra Club and Friends of the Earth have been pushing to shutter the project and require SCE&G to pay back customers for a project the environmental groups said was never worthwhile in the first place. But the issue is particularly relevant now that SCE&G has decided not to build the reactors, Guild said.
Despite the criticism, Marsh said his company is working on a plan to keep future rate increases down as SCE&G shutters the project. SCE&G has put about $5 billion into the reactor project and is seeking permission from the Public Service Commission to recover some of those costs. The company filed a petition with the PSC late Tuesday.
The company says it will use part of $1 billion pledged by the Toshiba Corp. to avoid raising rates in the near future. Toshiba is the parent of Westinghouse, the chief contractor. A state law approved in 2007 allows the power company to seek approval to recover the costs of shutting down the project, as well as for building it.
“We are taking all the steps we can to take the amounts we received from Toshiba .... to offset and mitigate impacts to customers going forward,’’ Marsh said.
Even so, doubts continue to arise about Toshiba’s ability to pay the $1.1 billion to SCE&G and nearly $1 billion to Santee Cooper. Financial troubles that drove Westinghouse to bankruptcy also have put Toshiba on shaky financial ground. Some reports have suggested the company could file for bankruptcy.
SCE&G officials said they believe the money will come through, but Santee Cooper executive Lonnie Carter said last week he’s concerned about Toshiba’s ability to pay.
Abandoned project by the numbers
▪ $11.4 billion — Initial cost estimate for building two more reactors at the V.C. Summer nuclear station
▪ $13.87 billion — SCE&G's latest official estimate for building the plants. However, SCE&G and Santee Cooper said last week that the final cost could "materially exceed" the most recent estimate
▪ $23 billion — Estimate from some analysts for what the project might have cost
▪ $9 billion — Amount spent so far by SCE&G and Santee Cooper on the nuclear project
▪ $1.4 billion — Money paid by SCE&G customers for the nuclear project
▪ 18 — Percentage of an average SCE&G customer's bill spent on the nuclear construction project
▪ 9 — Number of rate increases approved by the state Public Service Commission for the nuclear construction project