South Carolina Utility Company Faces Fallout After Nuclear Funding Meltdown

Santee Cooper is responsible for financing 45 percent of the $14 billion project while Cayce-based SCANA Corp.

📅   Mon April 03, 2017 - National Edition
David Wren dwren@postandcourier.com


Construction on the first nuclear concrete placement on the V.C. Summer plant back in 2012. via Scana Corporation.
Construction on the first nuclear concrete placement on the V.C. Summer plant back in 2012. via Scana Corporation.
Construction on the first nuclear concrete placement on the V.C. Summer plant back in 2012. via Scana Corporation. A crane places the first ring on the V.C. Summer Unit 3 containment vessel back in 2016. Photo via Scana Corporation.

The financial outlook for Santee Cooper has taken a hit in the aftermath of last week's bankruptcy filing by Westinghouse Electric Co., the main contractor on the V.C. Summer Nuclear Station project.

The credit-rating shops Moody's and Standard & Poor's downgraded the Moncks Corner-based utility's outlook to "negative" in reports issued last week as future construction of two reactors at the Midlands plant is now in doubt.

Santee Cooper is responsible for financing 45 percent of the $14 billion project while Cayce-based SCANA Corp., parent to South Carolina Electric & Gas, is the majority partner and responsible for financing 55 percent of the costs.

SCANA's financial outlook experienced similar downgrades following the Westinghouse bankruptcy, which essentially freezes all litigation and efforts to collect debts. It also buys Westinghouse time to restructure its balance sheet.

The V.C. Summer project in Jenkinsville is billions over budget and behind schedule, and Moody's said it expects construction progress "has likely continued to lag below expected monthly productivity growth rates necessary to achieve commercial operation by 2019 and 2020."

If the reactors aren't on line before the end of 2020, the utilities could lose up to $2.2 billion in federal tax credits that would have been refunded to customers.

"That said, our opinion is that Santee Cooper could bear additional costs over and above the current budget," Moody's said.

Analysts at Morgan Stanley have projected V.C. Summer's costs could top $19 billion — if the project is completed at all. Both Santee Cooper and SCANA say they are evaluating the next steps to take following Westinghouse's bankruptcy, with abandoning the project one of the options.

While Westinghouse and its parent, Toshiba Corp. of Japan, have guaranteed repayment of the utilities' costs if the contractor can't finish the project, S&P said there are doubts the contractor will be able to follow through.

"The financial difficulties Toshiba and Westinghouse face create uncertainty as to the contractor's capacity to complete the project," the ratings agency said. "Moreover, it is becoming increasingly unclear whether Toshiba has the financial capacity to guarantee the financial obligations of its subsidiary, Westinghouse, particularly because of our view of the difficulties it faces in accessing debt and equity markets."

For more information, visit http://url.ie/11q6e.