Utility drops rate hike plans for failed nuclear project

By SEANNA ADCOX Markets Associated Press

Millions of customers who have been footing the bill for years for a now-abandoned nuclear power project may get a temporary reprieve from rising bills, as South Carolina's state-owned utility dropped plans Friday for two consecutive rate hikes.

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Santee Cooper's board canceled the approval process for average increases of 3.5 percent in 2018 and 3.9 percent in 2019. A vote on the requested hikes had been set for December.

They would have been the utility's sixth and seventh hikes since 2009 for the now-abandoned expansion of V.C. Summer Nuclear Station north of Columbia. Santee Cooper and South Carolina Electric & Gas decided July 31 to halt construction on two new reactors they'd already jointly spent $10 billion to build, much of that paid by customers.

"Conditions have changed materially since the rate process began," said Santee Cooper board Chairman Leighton Lord.

But the cancellation doesn't necessarily mean rates won't eventually rise for the more than 2 million customers served by Santee Cooper, which provides power directly and through local electric cooperatives. The board directed the utility's staff to come back in October with a new financial plan.

"Santee Cooper will still need to cover costs related to our load, other system improvements and environmental compliance," said Santee Cooper CEO Lonnie Carter. "We will tighten our belts and continue to look for ways we can be more efficient to make up the balance."

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Carter said the state-owned utility would have had to raise rates by 41 percent to continue with the project.

Friday's unanimous vote comes amid a backlash from the public and lawmakers.

The scuttled nuclear project already accounts for 18 percent of SCE&G's residential electricity bills and more than 8 percent of Santee Cooper's. SCE&G is seeking permission from the Public Service Commission to recoup an additional $5 billion over 60 years. Those regulators approved all nine of SCE&G's rate hike requests since 2009. Legislators have publicly warned commissioners they may be fired.

Three of those commissioners are up for re-election early next year by the Legislature. Seven people, including the incumbents, filed for the three slots by Friday's noon deadline. The commission has no authority over the state-owned utility.

Gov. Henry McMaster said this week he's talking with other utilities about the possibility of buying out Santee Cooper's 45 percent share of the project or even buying the state-owned utility outright as a way to renew construction and complete at least one of the partly-built reactors.

But Carter said there are no credible offers.

The utility has already sent letters to about 50 companies to explore that possibility, said Santee Cooper spokeswoman Mollie Gore.

Kevin Marsh, the CEO of SCE&G's parent company SCANA, told regulators last week he tried unsuccessfully for four months to get another utility interested in being a co-owner and sharing the cost.

Marsh said Thursday that McMaster's efforts might be moot, as his company may not resume construction regardless, The Post and Courier of Charleston reported.

"I've got to be convinced that building the one-plant option — even with a new partner — would be in the best interest of our customers," Marsh told a legislative panel in Charleston.

The project was already years behind schedule and billions over budget when lead contractor Westinghouse declared bankruptcy in March, which voided fixed-price contracts aimed at stopping the escalation. Utility executives said they were forced to give up after determining the price tag for completing the project, budgeted at $11 billion total in 2008, had soared beyond $20 billion.

"If someone says they're interested, that's not something that will happen overnight," Marsh said in Charleston. "There are a lot of bridges that have to be crossed before we would get there."

Renewing construction would take at least a year, as SCE&G and the new utility would have to negotiate their own terms as well as new construction contracts, Marsh said.

The change would also need approval from the federal government.

The Nuclear Regulatory Commission granted Santee Cooper and SCE&G a combined operating license in 2012 — four years after the utilities submitted an application. The federal agency must approve any license transfer. Such a review could take a year, depending on the terms of the sale, an agency spokesman told The Associated Press.