A settlement has been reached between South Carolina Electric & Gas and the South Carolina Small Business Chamber of Commerce that limits the increase in construction costs to consumers for the utility’s two new nuclear units under construction in Fairfield County.
The chamber’s President and CEO Frank Knapp told South Carolina Radio Network that the agreement was the only chance to keep future hikes in construction costs from being passed on to SCE&G’s consumer.
“This is really our only opportunity to try to reign in the additional costs that are coming and try to keep SCE&G to a fixed price for the balance of the construction,” said Knapp.
The settlement will still allow the total construction price to increase another $831.3 million, bringing the nuclear plants’ price tag to about $14 billion. That is 22 percent higher than the original estimate. The settlement reduced the return on equity for future construction financing costs of the project to 10.25 percent from 10.5 percent for a projected savings to the customers of about $26 million.
The settlement includes a fixed price option: in exchange for the approval of an additional $505.5 million, SCE&G guarantees no further requests for more money from its customers to pay for construction costs, with some minor exceptions. “The most important part of this settlement was that the fixed price option that SCE&G agreed to,” Knapp said.
If the final construction costs are higher, the utility’s shareholders and, or the project’s prime contractor Westinghouse will be financially liable for any further cost overruns.
Other parties involved in the signing of the settlement agreement with SCE&G were the state Office of Regulatory Staff, the Central Electric Power Cooperative, the Electric Cooperatives of South Carolina and the South Carolina Energy Users Committee.