SCANA (NYSE:SCG) utility South Carolina Electric & Gas (SCE&G) has elected to go with a new fixed price option in its revised agreement with its new lead contractor for V.C. Summer Units 2 and 3.
The utility said May 26 that it has filed a petition with the Public Service Commission of South Carolina seeking approval to update the capital cost schedule as well as the construction milestone schedule for V.C. Summer Units 2 and 3, the two Westinghouse Electric AP 1000 nuclear plants being constructed at the V.C. Summer Station in Jenkinsville, S.C.
In short, the majority owner of the two nuclear units now under construction has agreed to accept increased costs in exchange for a fixed price contract and more certainty.
Under the agreement submitted to the South Carolina PSC, the SCE&G share, as majority owner, would be approximately $7.679bn, the utility said in a news release.
Within this petition, SCE&G has informed the South Carolina PSC that it has notified Westinghouse that it will elect the fixed price option under the October 2015 amended engineering, procurement, and construction (EPC) contract, subject to formal concurrence by the minority owner, Santee Cooper, and the approval of the PSC.
Both units should be built in the summer of 2020
The construction schedule reflected in the petition indicates a guaranteed substantial completion date for Unit 2 of August 2019 and a guaranteed substantial completion date for Unit 3 of August 2020.
Toward the end of 2015, contractor Westinghouse bought CB&I Stone & Webster, the nuclear construction and integrated services business of Chicago Bridge & Iron (NYSE:CBI). With the transaction, Westinghouse became the chief contractor in charge of getting the Units 2 and 3 built at V.C. Summer.
These dates were established by Westinghouse in the October 2015 amended EPC contract. Subsequent to the signing of this amended EPC Contract, Westinghouse hired Fluor as the subcontracted construction manager for the project.
This petition reflects an increase in SCE&G’s total Project costs of approximately $852m (a reconciliation of these additional costs can be found below) over the $6.827bn approved by the SCPSC in Order No. 2015-661. This increase includes approximately $505m that is directly related to the fixed price option.
“Construction of the two new nuclear units continues to progress,” said SCANA Chairman and CEO Kevin Marsh.
“Fluor has proven to be an asset to the Project team and the vast majority of the major components and equipment have been received onsite. Completing these plants is imperative to bring clean, safe, and reliable electricity to meet the long-term energy needs of South Carolina.
The fixed price option provides substantial value to the utility and its customers by limiting the risk of future cost increases, Marsh added.
Based upon today’s filing, and statutory requirements, SCE&G anticipates receiving an order no later than Nov. 28.
The interim dates for parties’ testimony and the hearing on the petition will be established by the PSC. The petition will be available on the Company’s website, www.scana.com, as well as the SCPSC’s website.