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Costs for building South Carolina’s 2 new nuclear reactors have jumped dramatically

nuclear-costs3Flag-USASCE&G Requests $852 Million Increase in Cost of VC Summer Nuclear Construction Project; Huntington News, , June 3, 2016 – EDITED FROM A PRESS RELEASE Columbia, SC – The current cost for the construction of two new nuclear reactors by South Carolina Electric & Gas (SCE&G) has jumped a stunning $852 million, according to a request filed with the South Carolina Public Service Commission (SC PSC) on May 26, 2016, (See filing linked in “notes” below.)

The filing made by SCE&G states that “the capital cost estimate for which the Company seeks Commission approval in this proceeding is $6.8 billion in 2007 dollars and $7.7 billion with escalation.”

As SCE&G is now a 55% owner of the project, with Santee Cooper owning the other 45% (set to go down to 40%), this means that the overall cost of the project is now around $14 billion. Expected schedule delays or construction problems will only add to that cost…….

The company has also requested delays in achievement of completion milestones in key aspects of construction.

“The request for a cost of overrun of this magnitude will hit consumers hard and the PSC should for once side with residential and business customers and require for SCE&G its shareholders to bear a major portion of the cost increase as it is in large part due to poor project management,” said Tom Clements, director of Savannah River Site Watch. “The law under which the project is being pursued is not a blank check for endless cost overruns and schedule delays and the company must be held accountable by the PSC for the costly problems and mistakes with the project.”

Also on May 26, SCE&G informed the PSC that it would be filing for its annual nuclear cost rate hike, as allowed by the Baseload Review Act (passed by the SC legislature in 2007). SCE&G rate payers have already been hit with eight (8) rate hike under the BLRA – the first was approved when the project was

approved by the PSC – so the next pay-in-advance rate hike will be number 9. According to the SC Office of Regulatory Staff (ORS) – in an email to Tom Clements in September 2015 – an average SCE&G residential customers is now paying 15.5% of the bill for advance payment of financing costs for the project (as allowed by the BLRA). It is unknown what will happen to rates when the much larger capital (construction) costs go into the bill.

SCE&G claims it has agreed to a “fixed cost” with Westinghouse and Fluor for future costs of the project but that cost can increase with “future change orders which are Owner-directed or based on changed circumstances,” according to the filing, or with any PSC rulings allowing yet more cost increases.  “The claim that the cost is fixed is very misleading as it’s clear that there can be future cost increases, all of which would be passed on to the consumer if allowed by the PSC. The cost of the project is not capped and unless the PSC acts responsibly to curb the cost the sky’s the limit on future cost overruns, so customers should be braced for yet more negative rate impacts,” said Clements.

Both Santee Cooper and the electric cooperatives will at some point be hit with higher rates due to the cost increase with the nuclear project but details of those impacts are unknown…….

June 4, 2016 - Posted by | business and costs, USA

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