A founder of the Stop the Blank Check coalition supports a settlement filed with the S.C. Public Service Commission in regard to S.C. Electric & Gas Co.’s request for an additional $852 million for the construction of two nuclear reactors — though he hopes that the message sent by the filing goes beyond an individual case.
Frank Knapp, president and CEO of the S.C. Small Business Chamber of Commerce, said he signed onto the proposed settlement entered into by the Office of Regulatory Staff for several reasons, with a main consideration being the settlement’s intention to address the “fixed” price of construction — now at $505.5 million — that has kept climbing since the project was announced in 2008. Knapp said that SCE&G now agrees that, with few “appropriate” exceptions, it will not ask ratepayers to cover any additional future cost overruns for the V.C. Summer Nuclear Station in Fairfield County.
SCE&G has requested nine electric rate increases related to construction financing costs of the V.C. Summer project since its inception.
“Their history is, whenever SCE&G runs into a problem with a contractor, they simply renegotiate the contract, and inevitably when they renegotiate a contract, it costs more money,” Knapp said. “(The settlement) clearly shows an acknowledgment by SCE&G that it’s not fair to the consumers to keep going back to the well. It puts their shareholders with skin in the game. They now have financial risk. That extra money is going to come out of the shareholders of SCE&G, or they’re going to have to try to get it out of (project contractor) Westinghouse.”
In late June, SCE&G, the principal subsidiary of Cayce-based energy provider SCANA Corp., applied for a 3.06% increase in electric rates to offset construction financing costs of the nuclear reactors. Thursday’s settlement, which will be considered by the Public Service Commission, also reduced the total cost of SCE&G’s request by $20.45 million and reduced its return on equity from the current 10.5% to 10.25%.
Bigger picture, Knapp hopes the settlement sends a signal in the Stop the Blank Check coalition’s fight to amend the Base Load Review Act, which allows utilities to collect construction finance costs on nuclear construction projects prior to the completion of the plants with what the coalition considers to be relative impunity.
“We may have stopped the blank check on this project, but we now need to stop it for any future power plant construction,” Knapp said. “That means we have to change the law. We ought to have that type of incentive, that type of skin in the game, written into the law.”
Knapp said the coalition, formed in July, will continue to work to secure support for its position in the Legislature.
“The coalition still goes on,” he said. “The coalition primarily is interested in amending the BLRA act so this doesn’t happen again.”