South Carolina Electric & Gas Company (SCE&G) is to increase its stake the VC Summer nuclear project from 55% to 60%, after agreeing to buy a 5% share in Summer 2&3 from Santee Cooper.
SCE&G is expected to pay South Carolina's state-owned electric and water utility, Santee Cooper about $500 million (EUR366 million) for a 5% interest in the two new Westinghouse AP1000 nuclear units, currently under construction in Jenkinsville, South Carolina.
The transaction will take place over several years and should be finalized by 2021. SCE&G would acquire the first 1% interest in the project upon commercial operation of the first new nuclear unit (Summer 2), which is anticipated in late 2017 or early 2018. An additional 2% would be acquired within 12 months of the commercial operation date, with the final 2% before the second anniversary of commercial opeation.
Once completed SCE&G will own 60% of Summer 2&3 and Santee Cooper will own 40%. As part of the agreement, Santee Cooper will not transfer any of its remaining ownership interest in the two new units until both have been completed.
The Santee Cooper Board of Directors approved the sale on 27 January 2014. The transaction is subject to customary closing conditions, including receipt of necessary regulatory approvals, a statement said.
SCE&G sees Summer 2&3 as a replacement for coal
SCE&G said that by increasing its ownership of the Summer nuclear project, it would delay the need to build new gas-fired capacity after 2020.
"The addition of approximately 110MW from this purchase will help us replace a portion of 345MW of older coal fired generation expected to be retired over the next five years," said Kevin Marsh, chairman and CEO of SCANA, which owns SCE&G.
"A 5 percent increase in our ownership of the new nuclear project will delay the need to build new gas fired capacity after 2020 with clean, non-emitting nuclear energy," he added.
Santee Cooper has been looking to reduce its stake in the Summer project since 2011, and has been in negotiations with US utility Duke Energy since July 2011. However, Duke Energy revealed, 27 January, that it is no longer in talks regarding the potential acquisition of a 5%-10% ownership interest in the Summer project.
Lonnie Carter, Santee Cooper president and CEO said the deal would reduce the costs to its customers. "The past few years have shown unprecedented volatility in base load fuel costs and increasing regulatory pressures on fossil-fueled generation. 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."
Photo: The V.C. Summer nuclear construction site in November 2013 (Source: SCE&G)