SCE&G to acquire increased share of nuclear units from Santee Cooper
Originally published January 28, 2014
Santee Cooper’s board yesterday approved an agreement for South Carolina Electric & Gas Co. to acquire from Santee Cooper a 5 percent ownership interest in the two new nuclear units under construction at the V.C. Summer Station for an estimated $500 million. Under the terms of the transaction, SCE&G will own 60 percent of the new nuclear units and Santee Cooper, 40 percent.
The purchase price would be equal to Santee Cooper's actual cost of the percentage conveyed as of the date of the conveyance. That is anticipated to be approximately $500 million for the entire 5 percent interest, based on current project cost. The agreement also provides that Santee Cooper will not transfer any of its remaining ownership interest in the two new units until both units have been completed. The transaction is subject to customary closing conditions, including receipt of necessary regulatory approvals, the utility said.
The 5 percent ownership interest would be acquired in three stages, with 1 percent to be acquired at the commercial operation date of the first new nuclear unit, which is anticipated to be in late 2017 or the first quarter of 2018; an additional 2 percent to be acquired no later than the first anniversary of the commercial operation date; and the final 2 percent to be acquired no later than the second anniversary date of the commercial operation date.
Santee Cooper said it has been exploring opportunities to reduce its ownership level since 2011, to better match the new units' capacity with business needs when the units come online and still provide generating diversity that takes into account regulatory and fuel cost considerations.
"The past few years have shown unprecedented volatility in base load fuel costs and increasing regulatory pressures on fossil-fueled generation," said Santee Cooper President and CEO Lonnie Carter. "Today's action reduces our costs to customers somewhat, while still preserving an ownership level that will position us well for the flexibility we will need going forward."
"SCE&G has done a stellar job as managing partner of V.C. Summer Unit 1, and they are supervising construction of our two new units in similar fashion," Carter said. "Today's board decision lets us strengthen that longstanding relationship with SCE&G. It also gives Santee Cooper a more precise future nuclear capacity that meets our generating targets and our customer needs."
The addition of approximately 110 MW from this purchase will help replace a portion of 345 MW of older coal-fired generation expected to be retired over the next five years, said SCANA, SCE&G’s parent company. The added 5 percent share of the new nuclear project will delay the need to build new gas-fired capacity after 2020, the company said. "Once the new nuclear units are completed and go into commercial operation, we would expect to pay for the additional 5 percent with internal funding without the need for long-term external financing," SCANA CEO Kevin Marsh said.
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