Proposed Colleton County power plant now to cost twice as much as first thought

CHARLESTON, S.C. (WCSC) - When Santee Cooper’s board approved moving forward on a new power plant in Colleton County on Friday, the plan carried a price tag much higher than originally expected.

The Canadys Station power plant is one of the largest projects for Santee Cooper. It’s expected to have the capacity to power more than a quarter of a million homes.

In August of last year, Santee Cooper CEO Jimmy Staton told state senators in a committee meeting the project would cost about $2.5 billion and that the utility would split the cost with Dominion Energy as a joint project. Based on those conversations, lawmakers agreed to allow Santee Cooper to collaborate with Dominion to move forward with the project.

However, in a Santee Cooper Board meeting on Friday, the cost now appears to have doubled, with the projections settling at $5 billion. Santee Cooper would be responsible for about half of the total cost, or $2.5 billion.

A spokesperson for the state-owned utility company confirmed their portion of the project’s estimated cost of $2.5 billion in a statement on Wednesday:

South Carolina is growing and so are energy demands and our customer base. To meet these demands, we’re investing in new generation projects — responsibly, efficiently and with our customers’ long-term interests at heart.

By partnering with Dominion Energy to build a natural gas plant, it will cost far less than if each utility builds separate plants. It also allows us to take advantage of existing infrastructure and economies of scale that will produce savings for our customers.

Right now, the construction capital cost estimate ranges between $2,100 and $2,300 per KW. This is in line with other similar projects. For example, another CEO recently put the estimated cost of new gas generation at $2,400 per kW. In terms of Santee Cooper’s total costs, that will be approximately $2.5 billion.

As a public power entity, Santee Cooper has access to tax-exempt financing, which means we can issue low-cost, long-term debt that spreads the costs over the life of the assets and reduces any monthly impact on customer bills. Our costs will also be spread across a growing customer base, reducing the impact on individuals.

By taking advantage of public power financing tools and smart planning, we’re keeping costs low today while ensuring reliable energy for generations to come.

It’s unclear what may be behind the increase, but Eddy Moore, the decarbonization director for the Southern Alliance for Clean Energy, says the higher price could be caused by increased competition to build more power plants.

“I think the reasons why it has doubled that are understandable,” Moore said. “All of the utility companies in the whole Southeast are racing each other to build power plants, and if you’re the one who makes power plants, you can charge a premium.”

In Friday’s meeting, Santee Cooper said the new budget would likely give them the wiggle room they need to accommodate price increases, but Moore says it’s possible the cost could still go up.

“One thing to emphasize, they haven’t even begun construction yet. And there’s a lot of risks that could introduce time delays here, and time equals money when you’re talking about large construction projects,” Moore said. “Probably the biggest risk and the biggest unknown cost at this point is the pipeline and pipeline infrastructure all the way back to Mississippi that has to be upgraded or built new to supply this plant. And that cost has been a tightly held secret.”

Moore also says these prices say nothing about the highly volatile price of natural gas once the plant is open.“The whole economy of South Carolina will be much more dependent on natural gas imports - a volatile cost fuel,” Moore said. “It’s a cost that can swing a billion dollars in a year. When Russia invaded the Ukraine, the cost of natural gas went through the roof.”

The increase is also worrying residents living in the area.

“When you’re talking about doubling the original cost – who’s going to pay that?” said Hiram Davis, a Colleton County resident. “We are already on the struggle bus as everyday middle American citizens, and now you come with something of this magnitude. I am really not liking this at all, and I am really concerned about our community and our county.”

The plant still needs regulatory approval from the Public Service Commission. Santee Cooper says they expect to have those plans submitted in mid-December.