By Harriet McLeod
CHARLESTON, South Carolina (Reuters) - Construction costs for two new nuclear reactors in South Carolina will go up almost $700 million in 2007 dollars and completion of the plants will be delayed three years, according to a settlement agreement approved on Wednesday by the South Carolina Public Service Commission.
The delays will push completion of the plants to 2019 and 2020, the seven-member commission said.
After the vote, SCANA Corp, parent company of the primary utility owner South Carolina Electric & Gas Co [SCGSCA.UL], said the estimated overruns would push the cost of the project to $5.2 billion in 2007 dollars, or $6.8 billion in today's dollars.
Also, the allowed return on equity for the new nuclear project will be revised from 11.00 percent to 10.50 percent, SCANA said.
The Westinghouse reactors are being built at the V.C Summer Nuclear Generating Station near Columbia.
"These delays and related cost increases are principally due to design and fabrication issues associated with the production of submodules used in construction of the units," Kevin Marsh, chief executive officer of SCANA Corp, said in a statement in March.
"We continue to negotiate with Westinghouse and Chicago Bridge & Iron regarding the responsibility for delay costs associated with the submodules."
South Carolina and Georgia are building the first from-the-ground-up nuclear reactors in the United States to be approved since the late 1970s. The units are being built under a pay-in-advance scheme.
A critic of the nuclear plant said local electricity rates will have to rise to pay for the construction costs. Tom Clements, director of the nuclear watchdog group Savannah River Site Watch, said on Wednesday in a telephone interview: "The shareholders and the company aren't responsible for any of the cost. In the end, the rate payer pays for all of it."
Clements, who said he has followed the nuclear industry for four decades, said modular construction methods had not kept costs and construction schedules under control as the industry had hoped.
"Modular construction was the hope for the nuclear renaissance," Clements said. "There are a lot of lessons being learned that the modular process isn't working out."
(Reporting By Harriet McLeod; Editing by Dave Gregorio)