Nuclear construction delays cost real money

We don't get tired of showing this photo, taken May 22, 2014, of construction of the Summer reactors--indicating just how far construction still has to go....

We don’t get tired of showing this photo, taken May 22, 2014, of construction of the Summer reactors–indicating just how far construction still has to go….

That didn’t take long. On Tuesday, we reported that SCANA announced at least a year’s delay in the construction of its Summer reactors. Apparently all the money from those six rate increases already imposed on South Carolina ratepayers–and the seventh it has pending–doesn’t buy decent construction help these days. Of course, having enough money never prevented construction delays in the past. And the reality is that delays cost even more money.

And that’s now true for SCANA and its largest subsidiary, South Carolina Electric & Gas (SCE&G). Today, the ratings firm Fitch downgraded both companies’ stock from “stable” to “negative.” That means both companies will have to pay higher interest rates for their loans. And despite the fact that money is being collected from ratepayers in advance of the reactors being built under South Carolina’s early cost recovery tax, it still takes loans to finance multi-billion dollar nuclear reactors. 

Said Fitch in a statement:

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 (PSC), making full cost recovery less certain.

Fitch is particularly concerned about the extent of the potential cost increase and the PSC’s willingness to have rate payers shoulder the entire burden.

Will the PSC decide to stand up for ratepayers and not allow SCANA to put the entire burden of the upcoming cost increases on them? That could make the credit rating of the utilities drop even further. But if the PSC sides with the utilities, rate increases will be even higher than previously projected.

And so the current nuclear construction cycle repeats the mistakes of the past. And this time, as the adage goes, it really is farce, because this time everyone involved already knew better.

Michael Mariotte

August 15, 2014


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4 thoughts on “Nuclear construction delays cost real money

  1. eliewestcan

    Paul Krugman recently wrote a column titled Knowledge is Not Power. He was talking about those who insist on cutting taxes and budgets saying it will lead to prosperity. Despite all evidence to the contrary. It’s the same here. Those who are doing this just repeating the same mistakes over. and over. Insanity. Facts don’t work. to change minds of these decision makers. What on earth is left .

  2. Peter Sipp

    Hello eliewestcan Do you live in S.C? If so… What will help the “decision” makers is good ole fashioned protesting their offices. The “noise” needs to almost make them uncomfortable. I wonder if you are in S.C., why not get to know Tom Clements and some of the other people in S.C. that are making things happen there. Tom Clements is active about SRS Watch. Just search around sites about n. power and you should be able to find him/others. Best to you, Pete


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