Published Oct. 1, 2012
The state Public Service Commission has given South Carolina Electric & Gas the go-ahead to raise electric rates an average of 2.3% to cover the cost of building two reactor units at the V.C. Summer Nuclear Station near Jenkinsville.
SCE&G, principal subsidiary of Cayce-based SCANA Corp., initially sought an average 2.69% rate increase to raise $56,747,000 in revenue, according to documents filed by the state Office of Regulatory Staff (ORS).
After reviewing SCE&G’s application to raise rates, ORS recommended reducing the hike to 2.3%. SCE&G accepted the agency’s recommendation and the commission issued an order Friday approving the rate hike.
The rate increase will raise about $52,148,913 in revenue – about 8% less than SCE&G sought, according to commission documents.
The increase will be effective Oct. 30 and is the fifth rate hike SCE&G has been granted since April 2009 under the state Base Load Review Act.
Here’s a breakdown of approved electric rates:
- 2.47% for residential customers.
- 2.35% for small commercial customers.
- 2.26% for medium commercial customers.
- 2.1% for large commercial/industrial customers.
The state law, adopted in 2007, allows power companies to seek annual adjustments to rates during construction of nuclear units as a means of recovering financing costs associated with the project.
All five rate hikes approved under the base load review law total 8.6%, according to commission records.
The total of increases does not include a 4.88% general rate hike the commission approved in June 2010. SCE&G implemented that rate increase in three phases, the last of which took effect in July.
SCE&G has another general electric rate hike request pending. It seeks a 6.61% boost, effective in January.
Two new units planned
SCE&G and Santee Cooper, a state-owned electric and water utility in South Carolina, are building two 1,117-megawatt nuclear electric-generating reactor units at V.C. Summer, where they presently operate a 966-megawatt reactor unit that went into operation in 1984.
The first of the new units is expected to come on line in 2017, the second in 2018. The projected cost of the two units is a total of $9.8 billion. SCE&G’s share of the project is 55%.
Paying financing costs while construction is ongoing, as opposed to waiting until the project has been completed, lowers the cost of building the new units by about $1 billion, SCE&G said. SCE&G estimates paying financing costs now will save customers $4 billion in electric rates over the life of the new units.
In a report filed with the PSC at the end of the second quarter, SCE&G said construction of the new nuclear units is on schedule and about $500 million below budget largely due to lower interest costs.
Rate increases under the BLRA are expected to average more than 2% annually through the life of the project, but will vary year to year based on actual construction costs.
The ORS is charged by the legislature with representing the public interest in utility regulation by balancing the concerns of the public, the financial integrity of public utilities, and the economic development of South Carolina.