MONCKS CORNER, S.C. – The Santee Cooper Board of Directors recently authorized management to withdraw two proposed rate increases that if approved, would have taken effect in 2018 and 2019. The action follows the Board’s suspension last week of the construction of two nuclear power units at V.C. Summer Nuclear Station.
The Board’s vote cancels all steps in the rate process, including rate comment meetings scheduled for next week in the utility’s retail customer service territory and an October Board public hearing on the rate proposal, as well as a scheduled December Board vote on the increases. Santee Cooper is planning informational meetings in our retail territory in the upcoming weeks, to discuss the factors leading up to our suspension of the Summer plant expansion. Details about these meetings will be announced soon.
“Conditions have changed materially since the rate process began in March,” said W. Leighton Lord III, Chairman of the Santee Cooper Board of Directors. “Our recent Board votes to suspend the nuclear project and also to accept a negotiated settlement with Toshiba, Westinghouse’s parent company, allow us to now cancel this rate process. The Board will continue to make decisions based on what is necessary to protect the financial integrity of Santee Cooper.”
The Board approved a rate study in March, prior to Westinghouse’s bankruptcy. Based on that study, Santee Cooper management in June proposed rate increases of an average 3.7 percent each across all customer classes that would take effect in April 2018 and April 2019. Those rate increases were needed to meet additional expenses related to the nuclear project, declining load, other system improvements and environmental compliance. Those proposed rates have been in a period of public review since June.
“Toshiba’s settlement will help offset the cost of the nuclear project, but Santee Cooper will still need to cover costs related to our load, other system improvements and environmental compliance,” said Lonnie Carter, Santee Cooper President and CEO. “We will tighten our belts and continue to look for ways we can be more efficient to make up the balance. It is important that we hold the line on costs, and Santee Cooper’s talented and dedicated workforce will rise to the occasion.”
Santee Cooper is the project’s minority owner, with a 45 percent share. South Carolina Electric & Gas owns 55 percent of the project. Toshiba, parent company to Westinghouse, agreed to settle its parental obligations for the project July 27, and Santee Cooper will use its net proceeds from that settlement to directly benefit customers. The settlement will be paid in installments beginning in October 2017 and ending in September 2022.
Suspending construction on the V.C. Summer expansion is projected to save Santee Cooper customers nearly $7 billion in additional capital and interest costs. Santee Cooper’s analysis of costs and schedule following Westinghouse’s bankruptcy showed the cost to complete both units would be $11.4 billion including interest. That represents a 75 percent increase over the original plan and a 41 percent increase over a fixed-price contract agreed to by all parties that took effect in November 2016, four months before the bankruptcy filing. The increase makes the project uneconomical.
Next week’s canceled rate comment meetings are:
- Aug. 14, 6 p.m., Moncks Corner
- Aug. 15, 2 p.m. in North Myrtle Beach, 6 p.m. in Pawleys Island
- Aug. 16, 2 p.m. in Conway, 6 p.m. in Myrtle Beach
Santee Cooper is South Carolina’s largest power provider, the largest Green Power generator and the ultimate source of electricity for 2 million people across the state. Through its low-cost, reliable and environmentally responsible electricity and water services, and through innovative partnerships and initiatives that attract and retain industry and jobs, Santee Cooper powers South Carolina. To learn more, visit www.santeecooper.com.