V.C. Summer Nuclear Reactor Delays Drop SCE&G Credit Rating To Negative

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Two 1,117-MW nuclear power plants being constructed at the V.C. Summer Nuclear Power site in Fairfield County for South Carolina Electric & Gas Co. (55%) and state-owned Santee Power (45%) have fallen behind schedule. (Not entirely unexpected, considering the overall track record of the nuclear power industry.) “The delay will put the $10 billion project at V.C. Summer Nuclear Power plant outside the 18-month contingency allowed by state regulators and likely will drive up the costs, but utility officials said they would not know how much until later this year.”

Two nuclear reactor delays at Jenkinsville, SC (SCE&G)
Two nuclear reactor delays at Jenkinsville, SC (SCE&G)

The reactor delays in construction of the $10 billion project caused the Fitch Rating credit desk to downcheck the rating outlook of the power company and its parent, SCG, to “Negative.” This occurred in spite of the attainment of 100 of 146 specific milestones and lower costs (before the delay) due to SCE&G paying millions less to borrow money for the project.

From MarketWatch Businesswire:

The Negative Rating Outlook for SCG and SCE&G reflects the heightened regulatory and financial risk of SCE&G’s nuclear construction program following the announcement of a longer than expected delay in the construction schedule and the uncertain cost impact. With the most recent delay, SCE&G will most likely exceed the cost and 18-month schedule contingency previously approved by the South Carolina Public Service Commission, making full cost recovery less certain.

The construction consortium, Westinghouse Electric Co., LLC, and the Chicago Bridge and Iron Co., N.V. (CBI), has fallen behind in its fabrication and delivery of sub-modules, causing the reactor delays, which are not the first at the site. Originally, the plants were to begin operating in 2016 for unit 2 and 2018 for unit 3. The current schedule for substantial completion is now March 2017 and May 2018.

Later this year, after negotiations with SCE&G management, the consortium will provide a more precise schedule and revised cost estimate and the PSC will rule on its acceptability. At this time, Fitch may reconsider the rating.

Who’s funding the downhill journey? Why, South Carolina power consumers, of course. They have already suffered seven rate hikes for the nuclear project, the latest one approved by regulators in May.

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