Santee Cooper greenlights $831M bond sale to fund nuclear construction
- The Santee Cooper Board of Directors has taken steps to lock in the cost of developing two new units at the V.C. Summer Nuclear Station by taking a fixed price option as part of an amended Engineering, Procurement and Construction Agreement.
- The board also approved the sale of $831 million in revenue obligation bonds, primarily to fund nuclear deveopment but with a portion going to refinance existing utility debt.
- Under the fixed price option, Santee Cooper's cost of the facility's costs will total $6.2 billion, 20% more than the utility estimated in 2012, the Post and Courier noted. Santee Cooper is developing the plant alongside South Carolina Electric & Gas Co.
Santee Cooper President and CEO Lonnie Carter said the board's decision will help keep costs down for customers, while helping shift the utility away from coal generation. But the bottom line adjustment to the project is more than $1 billion.
“Today’s board actions further enable Santee Cooper to minimize costs for customers as we strengthen and diversify our generation fleet by adding more reliable, carbon-free resources,” Carter said in a statement. “The excellent response by investors shows continued Wall Street support for our strong financial management and execution of this plan. These new nuclear units will significantly tip Santee Cooper’s generation away from coal, and nuclear power features low fuel and operating costs along with impressive reliability.”
The decision follows revelations that development costs at the facility are rising. SCE&G last month informed state regulators that its share of the development of two new nuclear units had increased significantly, rising about $852 million to reach $7.7 billion, with the total price tag coming in at around $14 billion. SCE&G attributed the ballooning costs to its choice of a fixed price option to construct reactors.
Santee Cooper owns 45% of the nuclear expansion project, and SCE&G owns 55%. In the fall, the the two utilities negotiated an amended EPC agreement with Westinghouse Electric Co. LLC, which Santee Cooper said including terms to incentivize schedule adherence and shift financial risk to Westinghouse for any additional delays in the current scope of work.
"The amended EPC Agreement also offers a fixed price option, and Santee Cooper’s authorization to proceed is contingent upon SCE&G receiving approval this fall of a related petition being considered by the South Carolina Public Service Commission," the utility said.
Santee Cooper said exercising the fixed price option will increase the budget for the nuclear project by about 20%, or $1.1 billion, "but provides cost certainty that could save customers hundreds of millions of dollars."
- The Post and Courier Santee Cooper authorizes $831M debt sale to fund nuclear project
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