Agreement on Summer cost overruns

South Carolina Electric & Gas has signed a preliminary agreement with Westinghouse and the Shaw Group to settle a dispute over early cost overruns for the construction of two AP1000 units at its VC Summer plant. A delay in receiving a licence for the units has led to a rescheduling of their completion dates.

South Carolina Electric & Gas (SCE&G) has signed a preliminary agreement with Westinghouse and the Shaw Group to settle a dispute over early cost overruns for the construction of two AP1000 units at its VC Summer plant. A delay in receiving a licence for the units has led to a rescheduling of their completion dates.

How VC Summer units 2 and 3 could look (Image: NRC)

The disputed costs primarily relate to delays in receipt of the combined construction and operating licence (COL) from the Nuclear Regulatory Commission (NRC), according to SCE&G.

The utility said that its share of these costs will be $138 million - some $50 million less than the upper bound of $188 million originally disclosed. SCE&G said that, after considering the impact of this preliminary agreement, together with current escalation rates, the projected cost of the project continues to be lower than the original $6 billion projection approved by the South Carolina Public Service Commission (PSC) in 2009. The company said that it will seek to update its capital cost schedule with the PSC to "reflect the impact of this preliminary agreement at the appropriate time."

SC&G submitted a COL application for VC Summer units 2 and 3 in March 2008 and the utility had hoped to be granted the licence last year. The EPC contract for two AP1000 reactors was signed in May 2008. SCE&G executed the EPC contract on behalf itself and its partner Santee Cooper, a South Carolina state-owned utility. SCE&G and Santee Cooper are joint owners and share operating costs and generating output of Summer Unit 1, which began commercial operation in 1984. SCE&G is the plant operator. A similar arrangement will apply to the two additional reactors, with SCE&G accounting for 55% of the cost and output and Santee Cooper the remaining 45%.

With extensive site preparation work already completed, the units had been pencilled in for operation in 2016 and 2019. However, SCE&G said, "Under the provisions of the preliminary agreement, having taken into account the delay in receiving the COLs, the two new units are now expected to be completed in 2017 and 2018." This essentially means that unit 2 would be completed a year later, while unit 3 would start operating a year earlier than previously planned.

Kevin Marsh, CEO of SCE&G's parent company Scana Corporation, said: "We are pleased that we were able to resolve these issues through negotiations. We remain firmly committed to construction of these two units and can now focus on receipt of our licence from the NRC and proceeding with full nuclear construction."

A decision by the NRC on granting a COL for the two Summer units is imminent.

Researched and written
by World Nuclear News