| March 28
March 28 Electric bills in Georgia and South
Carolina could rise more than customers expect if state
utilities are left stranded by a Westinghouse Electric Co
bankruptcy filing expected this week, consumer advocates said.
U.S. nuclear developer Westinghouse is the lead contractor
building two nuclear reactors each in Georgia and South
Carolina, both of which are billions of dollars over budget and
years behind schedule.
Westinghouse was expected to file for bankruptcy protection
as it struggles to limit losses that have thrown its Japanese
parent Toshiba Corp into crisis, people familiar with
Toshiba's thinking said.
If Westinghouse is unable to complete the reactors, it puts
the states in an unenviable position. They would either have to
go ahead with another contractor - which would cause delays - or
stop work, and find another solution for growing power demand.
"Neither scenario sounds good for ratepayers. People will
either be forced to pay for something they never got or pay more
to complete something that does not make economic sense," said
Liz Coyle, executive director of consumer advocacy group Georgia
Rates were already anticipated to rise per the terms of the
agreement with Westinghouse in coming years, as customers move
from paying for the financing costs for the reactors to paying
for construction costs when the plants go into service.
However, if the utilities - Georgia Power and South Carolina
Electric & Gas (SCE&G) - elect to stop building, customers are
still on the hook for what has already been spent on the
unfinished reactors. In addition, whatever replaces that power
generation will also need to be paid for.
"We’re getting briefings about what we’re facing and at this
point I don’t think any of the options are terrific," said Stan
Wise, chairman of the Georgia Public Service Commission (PSC),
which regulates rates in Georgia.
The reactors at Georgia's Vogtle plant were expected to cost
about $14 billion and enter service in 2016 and 2017. Now they
are not expected to be finished until at least 2020, with
expected costs around $19 billion.
The typical Georgia Power residential customer using 1,000
kilowatt hours pays about $122 per month. Of that, almost $7 is
covering financing costs for Vogtle. Georgia Power, a unit of
U.S. power company Southern Co, serves almost 2.5 million
homes and businesses in the state.
Once the project is complete, rates are expected to rise by
6 percent to 8 percent as customers have to cover the project's
capital costs. Coyle said cancelling or delaying the completion
would likely end up boosting customer bills by more than Georgia
The utility would have to go back to the Georgia PSC, which
would determine whether to complete the project or stop work.
"Knowing what we know today, we might not choose to build
the new reactors," the Georgia PSC's Wise said. Since the
commission approved construction a decade ago, natural gas
prices and renewable technologies have become less expensive.
Jacob Hawkins, a spokesman at Georgia Power, said the
company is monitoring the situation and is "prepared for any
The reactors at South Carolina's Summer plant were expected
to cost about $9.8 billion, excluding certain costs, and be
completed in 2016 and 2019; current estimates are around $22
billion and completion in 2020.
SCE&G, a unit of Scana Corp, serves about 714,000
customers. A typical residential customer using 1,000 kWh per
month pays about $148. Of that, about $27, or 18 percent, is for
construction, according to the South Carolina PSC.
"The financing cost of the new reactors alone will account
for over 25 percent of a typical customer's bill by 2020," said
Tom Clements, director of Savannah River Site Watch, a public
interest group monitoring energy and nuclear issues. He said he
expects "big rate hikes" when the reactors enter service or if
SCE&G stops work.
Rhonda Maree O'Banion, a Scana spokeswoman, would not
comment on possible rate hikes, saying they are "preparing for a
variety of possible outcomes."
(Reporting by Scott DiSavino in New York; Editing by Lisa