The extension of federal tax credits for new nuclear power projects will play a key role in whether construction of the V.C. Summer nuclear plant is completed following Westinghouse Electric's bankruptcy filing, an executive with SCANA Corp. told stock analysts on Thursday.
"It is very, very important to the viability," said Jimmy Addison, SCANA's executive vice president and chief financial officer. "We have impressed upon everyone that has a vested interest in South Carolina and in nuclear in America that ... the timeliness of this is very important to this evaluation."
Cayce-based SCANA is the parent to South Carolina Eletric & Gas, which is a partner with Moncks Corner-based Santee Cooper in construction of two new reactors at V.C. Summer near Jenkinsville.
SCANA is at the end of a 30-day assessment period in which it will decide whether to move forward with the project or abandon it completely now that Toshiba Corp. subsidiary Westinghouse, the main contractor, is in bankruptcy reorganization. Addison said SCANA plans to extend the assessment period by another 90 days, delaying a final decision on the project until late June.
The tax credits would offset about $2.2 billion of the current $14 billion in projected V.C. Summer construction costs, with the money going to ratepayers, but only if the reactors are online by the end of 2020. The Westinghouse bankruptcy filed a month ago has put that deadline in doubt. While most of the engineering is finished and major parts have been delivered, actual construction is just 33.7 percent complete.
Addison said an extension could be granted in coming days as part of a continuing resolution to fund the federal government or as part of a more comprehensive tax reform package. Bills also have been introduced in the House and Senate to extend the deadline.
"With new projects like this, they know there are going to be challenges," Addison said, adding that federal officials are supportive of a deadline extension. "I know the Department of Energy understands that and certainly South Carolina's delegation does ... We're hopeful that gets traction."
Also important to SCANA's decision is an estimate of how much more the units will cost with Westinghouse out of the picture. Westinghouse estimates the additional costs will top $1.5 billion, and Toshiba has guaranteed any overruns up to $1.7 billion. But that guarantee could be rejected by a bankruptcy court, and Toshiba warned this month that it might not survive due to the mounting costs of its nuclear subsidiary.
Stephen Byrne, SCANA's vice president of generation and transmission, said the company prefers to finish both reactors with current construction manager Fluor Corp., or a different lead contractor, but the company might decide to build just one reactor or abandon the project based on what it learns over the next two months.
If both reactors aren't built, Byrne said the company would need to build additional capacity generated by natural gas to meet projected power demands.
SCANA would own 55 percent of the new reactors while Santee Cooper would own the remaining 45 percent. The expected 60-day extension of the assessment period would apply to both utilities.
The Westinghouse bankruptcy filing could force utility customers to pay higher rates to cover the cost overruns at V.C. Summer and it could alter the terms of a "fixed-price" contract that's in place to cap the project's expenses.
Santee Cooper is conducting a study to determine whether it will need to increase rates to help pay for the new reactors, but that review is not related to any additional costs the Westinghouse bankruptcy could bring. Santee Cooper increased rates by 3.7 percent in both 2016 and 2017 to help pay for the new units.
SCE&G has raised electric prices nearly 20 percent since 2009 to fund the nuclear project.
The nearly decade-long V.C. Summer project has been beset by financial and construction problems. The current cost estimate for the reactors is 21.6 percent higher than an original $11.4 billion price tag, and analysts say the eventual cost could balloon to $19 billion if both reactors are built.
Construction also is years behind schedule, with a pre-bankruptcy estimate putting the first reactor online in April 2020 and completion of the second unit delayed to December 2020.