Like its counterparts involved with the new Vogtle nuclear units in neighboring Georgia, SCANA (NYSE:SCG) and Santee Cooper have endorsed a transaction that leaves Westinghouse Electric Co. (WEC) as the sole contractor overseeing V.C. Summer Units 2 and 3 in South Carolina.
SCANA principal subsidiary South Carolina Electric & Gas (SCE&G) said it has agreed to an amendment to the existing Engineering, Procurement, and Construction Agreement (EPC agreement) from May 23, 2008, with a vendor consortium of Chicago Bridge & Iron (NYSE:CBI) and Westinghouse.
The contractors announced Oct. 27 that Westinghouse, which is part of Toshiba, will acquire the stock of CBI nuclear construction affiliate Stone & Webster.
Following that acquisition, Stone & Webster will continue to be a party to the EPC Agreement for the two AP1000 nuclear power plants Units 2 and 3 at the VC Summer Station (Project), but as a subsidiary of WEC instead of CB&I.
WEC intends to engage Fluor (NYSE:FLR) its affiliates as a subcontracted construction manager.
“We are excited about the changes in the structure of the construction team and the amendment to the EPC contract for the new nuclear plants and see these changes as very positive,” said SCANA Chairman and CEO Kevin Marsh. “Fluor is well respected in the industry and has been involved with many large electric generation projects, including our VC Summer Unit 1.”
“Fluor has deep South Carolina roots and an excellent record of delivering on commitments. The amendment to the EPC contract provides for significantly higher liquidated damages that are linked to timely completion of the nuclear plants and qualification for federal production tax credits,” Marsh added.
“We have strengthened the language in the EPC contract defining regulatory changes which has been the basis for many of our disputes with the consortium in the past. We also have negotiated a fixed price option which, if exercised, would limit the construction cost of the new nuclear plants,” Marsh added.
This amendment revises the Guaranteed Substantial Completion Dates (GSCDs) for Units 2 and 3 to August 31, 2019 and 2020, respectively.
Under this amendment, the total Project costs for SCE&G will increase by approximately $286m over the $6.827bn approved by the Public Service Commission of South Carolina in Order No. 2015-661. This will bring the total gross construction cost of the Project to approximately $7.113 billion.
The Santee Cooper Board of directors authorized its change to the contract for the V.C. Summer expansion project during a meeting Oct. 27. Santee Cooper is South Carolina’s state-owned utility and SCANA’s minority partner in V.C. Summer.
Santee Cooper said the contract change will provide more certainty on price and schedule.
The board approved a resolution authorizing Santee Cooper President and CEO Lonnie Carter to execute a new Limited Agency Agreement with SCE&G, reflecting approval of the amended EPC agreement.
Under the base amendment, Santee Cooper will pay an additional $112.5m to settle known construction cost increases agreed to last year. If the fixed-cost option is chosen and approved, Santee Cooper’s share would be another $800m in exchange for EPC Agreement price certainty for the balance of the construction project.
“This is a positive development in the new nuclear project, because it offers significant incentives and penalties associated with bringing the units online in 2019 and 2020,” Carter said.