NEW YORK, Aug 11 (Reuters) - South Carolina’s public power utility killed plans for two rate hikes that would help recover costs on a multi-billion-dollar nuclear project abandoned less than two weeks ago, its board of directors said after a special vote on Friday.
The utility, Santee Cooper, withdrew a proposed two-year 7.4 percent rate increase amid calls by state lawmakers to keep utility customers’ bills from soaring. Customers are expected to bear the brunt of costs lost on the nuclear reactor site known as V.C. Summer.
A recent settlement agreement with the parent company of V.C. Summer’s former lead contractor, Westinghouse, will allow Santee Cooper to offset the costs of the nuclear project and reevaluate its rate increase plan, it said.
“Santee Cooper will still need to cover costs related to our load, other system improvements and environmental compliance,” Lonnie Carter, the utility’s president and chief executive, said in a statement. “It is important that we hold the line on costs, and Santee Cooper’s talented and dedicated workforce will rise to the occasion.”
V.C. Summer was less than 40 percent built with $9 billion spent on construction when it was canceled on July 31, roughly a decade after approval. It was estimated to go 75 percent over the initial budget, to as much as $24 billion, before completion.
This week, the South Carolina Senate and House of Representatives created special committees to investigate V.C. Summer’s failure. State Attorney General Alan Wilson has also launched a probe.
“There are a whole lot of questions and very few answers for many of us,” said Senator Shane Massey.
Massey, who co-chairs the Senate’s Nuclear Project Review Committee, approved of Santee Cooper’s decision to cancel the rate increase plan. “We just want to make sure we have an opportunity to get answers before the customers and citizens get hit with rate increases,” he said.
While unpopular with many customers, Santee Cooper’s legal ability to raise rates to compensate for V.C. Summer expenses is seen as a key strength of the credit.
The utility’s tax-exempt revenue bonds traded heavily in the days after the project was aborted, but prices held steady.
Moody’s Investors Service rates the utility A1 while Fitch Ratings and S&P Global ratings have it at A-plus. All three give it a negative outlook.
Fitch analyst Dennis Pidherny said Friday’s vote did not warrant a change to the credit. He is waiting for a revised Santee Cooper financial plan due in October. (Reporting by Laila Kearney; Editing by Daniel Bases and Leslie Adler)