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South Carolina electricity customers must pay up for nuclear reactors, whether or not they are actually built

With $8.6 billion spent, fate of South Carolina nuclear reactors still unknown, Post and Courier, By Andrew Brown Jun 11, 2017  COLUMBIA — If two of the Palmetto State’s largest utilities pull the plug on their nuclear power plant expansion, around half of all South Carolinians could be on the hook for $8.6 billion to pay for a project that might never produce a single kilowatt of electricity.

It’s possible that bankruptcy proceeds, corporate payments and sales of the nuclear reactor components would help defray some of the costs to ratepayers if work stops on the V.C. Summer Nuclear Station in Fairfield County.

It’s just as possible the partnering utilities — publicly operated Santee Cooper and investor-owned South Carolina Electric & Gas​ — could decide as early as this month to continue work on the two new reactors, which have been plagued with cost overruns, construction delays and the bankruptcy of the project’s lead contractor.

In the end, the power companies can lean on their customers to recover the costs of the nuclear reactors no matter what they decide. For SCE&G, a 2007 law passed by South Carolina lawmakers allows the Cayce-based utility to collect a 10 percent profit for investors, even if the V.C. Summer project is scrapped.

“We are stuck to a great degree. The public is in a very bad position here,” said Lynn Teague, vice president of the League of Women Voters of South Carolina, who has followed the project. “It’s a rotten situation for the ratepayers.”

SCE&G and Santee Cooper already have sunk $8.6 billion into the project — more than half of the expected $14 billion needed to finish the reactors. The new power sources would serve around 1.6 million homes and businesses across South Carolina’s 46 counties.

The utilities have already collected nearly $2 billion from electric customers since the project received approval in 2008, but all of that money has gone to covering finance costs and not to the concrete, steel and manpower used to build the reactors.

The average residential electric bill for a SCE&G customer has risen by $324 a year to pay for the ambitious energy project that was pitched as part of a new carbon-free age of nuclear power in the United States.

The power companies said they could announce by June 26 whether they would stop work all together or continue construction on one or both of the reactors.

The biggest threat to the project is Westinghouse, the primary contractor at the project north of Columbia in Jenkinsville. Westinghouse filed for bankruptcy protection at the end of March.

Officials with SCE&G and Santee Cooper say they are closely monitoring Westinghouse’s bankruptcy proceedings, where both are creditors to the failing company. ……

SCE&G is all but guaranteed to get the project covered by its electric customers because of legislation passed by the General Assembly at the request of the utility industry in 2007.

That law, known as the Base Rate Review Act, allowed SCE&G to start collecting money for construction costs while work was being completed instead of after the fact. SCE&G said that would save $1 billion for what started out as a $9.8 billion project that was scheduled to open in 2016.

But the law also helped shift almost all of the risk for the endeavor off SCE&G’s parent and its shareholders and onto the electricity customers.

The only way that SCE&G will eat any of costs of the project now is if state regulators find the utility failed to, as law says, “anticipate or avoid the allegedly imprudent costs” based on the information available at the time. ……..


June 12, 2017 - Posted by | business and costs, politics, USA

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