Here’s why price for SC natural gas plant ballooned $2.5 billion in about a year

A proposed natural gas plant in Colleton County has doubled in price over the past year, adding $2.5 billion to the price tag.

Santee Cooper and Dominion are planning a natural gas plant in Canadys on the property of an old coal plant. The two utilities will split the cost of construction and the 2,200 megawatts of energy generated.

Santee Cooper and Dominion Energy received permission from the lawmakers to work together on the Canadys gas plant earlier this year. While discussing the project in front of a special Senate committee in August 2024, Santee Cooper CEO Jimmy Staton said the project’s estimated cost was $2.5 billion.

“It should be north of the $2.3 to $2.5 billion, or in that $2.3 to $2.5 billion total range,” Staton said at the time. When asked by Sen. Majority Leader Shane Massey, R-Edgefield, if that was the total cost Santee Cooper and Dominion Energy would split, Staton replied “That’s correct.”

But last week, the utility estimated the plant would cost $5 billion. The Santee Cooper board of directors approved the utility’s role in building the natural gas plant Oct. 24 at a scheduled meeting in Columbia.

A spokesperson for Dominion Energy confirmed in an email its share of the project cost was $2.5 billion. Santee Cooper will pay the other half.

The higher cost is based on current market prices, Santee Cooper spokesperson Mollie Gore said. The $2.5 billion estimate was made using historical price data for similar projects, she said.

The natural gas plant’s construction will cost $5 billion, Gore said. It does not include a necessary planned pipeline that will snake across the Georgia border through Hampton County into Colleton County. The 71 mile pipeline, slated to be built by Kinder Morgan, is expected to cost $431 million, according to a fact sheet from the company.

Utilities are pushing forward with new generation projects as demand from data centers and other large customers rise in the state. Last week, Santee Cooper OK’d next steps for over 4,500 megawatts of power.

Why did cost double?

Rising costs of materials and labor contributed to the higher cost of constructing the Canadys natural gas plant, Gore said.

Demand for energy is rising across the country, so demand for the construction materials to build generation is also rising, Gore said. That has led to inflated prices on materials, like gas turbines, she said. Gas fired turbines have seen higher costs and longer wait times as demand soars across the country, according to a May analysis from S&P Global.

The price of gas turbines, pressure from tariffs and cost of construction and engineering contracts impacted the overall price of the project, said Dominion spokesperson Rhonda O’Banion in an email.

“Many variables can affect this estimate, either upward or downward,” O’Banion wrote in an email.

A more exact cost will be made public over the next few months when the project seeks approval from the Public Service Commission. Massey said regulators would need to figure out why the cost doubled.

“It’s frustrating to me that customers are having to pay for V.C. Summer that’s not completed,” Massey said. “And then also going to have to pay for Canadys as well. But it’s even more frustrating if now you’re telling me that eight months later, the price is doubled.” The Senate passed the bill allowing the utilities to collaborate on the project in May this year, but Massey voted against the bill.

Massey said he believes if the V.C. Summer nuclear reactors had been completed, the proposed natural gas plant might not be necessary. Santee Cooper and the now defunct SCE&G abandoned two V.C. Summer nuclear reactors in 2017. Ratepayers are still paying for the failed project on their energy bills.

Efforts are underway to try and restart the abandoned nuclear project, with asset management company Brookfield chosen to take over the project. Some have worried the additional energy two new V.C. Summer reactors and the Canadys natural gas plant won’t be necessary, including John Brooker, the energy policy director at Conservation Voters of South Carolina.

But Staton told reporters Oct. 24 the projects would be useful regardless of the actual demand because the utility could always retire older facilities.

“We believe the state is going to grow enormously, like it has been,” Staton said.

“I think we’re in a great position to be able to, irrespective of what happens, to keep energy affordable and reliable and manage the implications of no growth or limited growth with other resources,” he continued.