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Report: SC nuclear reactor costs up; could drop

A South Carolina agency reported Wednesday that the cost of two nuclear reactors could rise by more than $500 million because of inflation in construction costs, though officials called it a high-end estimate.
/ Source: The Associated Press

A South Carolina agency reported Wednesday that the cost of two nuclear reactors could rise by more than $500 million because of inflation in construction costs, though officials called it a high-end estimate.

While environmentalists call the review by the Office of Regulatory Staff disturbing, agency executive director Dukes Scott said the increase is "not a call for alarm or panic."

According to the report, South Carolina Electric & Gas Co.'s budget for the reactors at the V.C. Summer Nuclear Station near Jenkinsville increased from $6.3 billion to nearly $6.9 billion. The state's largest private utility is required to adjust the estimated cost quarterly using a five-year inflation average.

Scott and an SCE&G spokesman attribute the increase to unusually high construction costs over the last five years.

"The five years we're looking at happen to have some of the highest inflation figures in recent times," said SCE&G spokesman Eric Boomhower. "It's almost an anomaly."

If the latest economic conditions continue, SCE&G's overall costs could stay at or below the $6.3 billion estimate, according to the report.

The forecast cost would have gone down had the report used a 10-year or one-year average for construction costs, Scott said.

"It is something we will monitor. As we come out of the recession, the inflation factors may change," he said.

The review for the quarter ending March 31 is the first since the state Public Service Commission approved the project in February. The timetable calls for the first reactor to generate power by 2016, and the second in 2019.

The two, 1,100-megawatt reactors will be jointly owned and operated with state-owned utility Santee Cooper, which is not subject to the same review process. The utilities already operate one reactor at the nuclear station about 25 miles northwest of Columbia.

Santee Cooper's portion is a projected $4.4 billion, unchanged since last year, said utility spokeswoman Mollie Gore.

The report also says SCE&G did not meet nearly half of its first-quarter scheduled milestones, although the utility completed them or plans to within the allowed, 18-month contingency. Scott said the agency will closely monitor the progression in the second and third quarters.

"While we don't anticipate exceeding any of our schedule contingencies, we are working with the contractors involved in this project to ensure we maintain some breathing room within our approved timelines," Boomhower said.

A group opposing the reactors says the report confirms its concerns.

"Any way you cut it, the cost of construction has gone up," said Tom Clements, a nuclear campaign coordinator with Friends of the Earth. He called the slipping schedule and cost adjustment a "real red flag the project is already running into trouble."

Friends of the Earth's appeal of the project is before the state Supreme Court, with briefs due in August. The group contends the state Public Service Commission did not adequately consider alternatives, notably energy conservation and efficiency programs, before giving approval, and that the law allowing utilities to collect money upfront to pay for the reactors is unconstitutional.

Customer rates are expected to go up roughly 2.5 percent yearly for the next 10 years to help pay the financing cost for SCE&G's portion of the project.

"Ratepayers could move or die and get nothing" from the money they've paid, Clements said.

Santee Cooper has not broken out how much its customers will pay for the project. The utility is proposing to its board an average increase of 4.4 percent starting this November and 5.5 percent increase in November 2010, with part of that covering construction of the reactors, Gore said.