Scana Corp. said Thursday it will absorb some of the construction costs from its failed nuclear plant project and roll back rates for South Carolina utility customers, as it faces pressure from state regulators and consumer groups over its handling of the development.
After collecting more than a billion dollars from customers to develop the nuclear plant it has since stopped working on, Scana subsidiary South Carolina Electric & Gas Co. proposed reducing rates by 3.5%, or $90 million a year, over five years. The reduction, the company said, would result in monthly bill deductions of over $5 and return rates to March 2015 levels.
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A South Carolina state official said earlier this year that customers had paid $1.4 billion for the plant, which comes to about 18% of a typical residential bill.
"We've heard our customers' frustrations about paying for a power plant and having nothing to show for it," said Keller Kissam, SCE&G's incoming president and chief operating officer, in prepared remarks. "This proposal gives customers additional power generation while also lowering rates for customers."
Scana also said its shareholders will absorb the net nuclear construction costs -- pegged at $2.9 billion -- through lower earnings over 50 years. It also plans to write off $810 million in costs related to the project.
It isn't clear whether the proposal would alleviate the political pressure the company faces to pass on more of the costs to its shareholders. Scana's plan requires approval from South Carolina's utility regulator.
The South Carolina Public Service Commission didn't immediately return a request for comment on Scana's plan. But the state's governor weighed in, calling it unsatisfactory.
"The governor asked Scana over a month ago to stop charging customers for this failed project and to give them their money back. Today's proposal does neither, and that's completely unacceptable," said Brian Symmes, a spokesman for Gov. Henry McMaster.
Scana shares rose 4.8% in morning trading, but are down 37% this year.
The company stopped its plans to build the V.C. Summer Nuclear Station this summer. Utility company Santee Cooper had anticipated the total cost of building the plant would be around $25.7 billion, more than double the $11.5 billion the plant was estimated to cost in 2008.
Since July the company has faced questions from local political officials about when it knew the project was in trouble, and why it didn't take steps sooner to avoid cost overruns. Federal officials have also been probing the project and how the company handled it. The company has pledged cooperation with subpoenas it received from the U.S. Attorney's Office in South Carolina and the Securities and Exchange Commission.
Last month, Scana announced its chairman and chief executive officer, Kevin Marsh, would leave the company at the end of year. Scana Finance Chief Jimmy Addison will become CEO Jan. 1.
SCE&G also said Thursday it would buy a natural-gas plant for $180 million to make up 40% of the power the nuclear plant was supposed to provide. The Gaston, S.C., plant is owned by Columbia Energy LLC. SCE&G has been the plant's main customer, the company said, and it aims for the deal to be approved next year.
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(END) Dow Jones Newswires
November 16, 2017 13:44 ET (18:44 GMT)