As I reported early last week, construction of two new reactors at the V.C. Summer nuclear power plant has been pushed back a year. Now, it looks as if the delay has had an impact on Summer’s owners’ credit rating. As Dow Jones’ MarketWatch reported last Friday:
Fitch Ratings has affirmed at ‘BBB+’ the Issuer Default Ratings (IDR) and instrument ratings for SCANA Corp. (SCG) and its largest subsidiary, South Carolina Electric and Gas Co. (SCE&G). Fitch has also revised the Rating Outlook for each entity to Negative from Stable.
MarketWatch singled out the delay in construction as the most significant factor in the downgrade:
he Negative Rating Outlook for SCG and SCE&G reflects the heightened regulatory and financial risk of SCE&G’s nuclear construction program following the announcement of a longer than expected delay in the construction schedule and the uncertain cost impact. With the most recent delay, SCE&G will most likely exceed the cost and 18-month schedule contingency previously approved by the South Carolina Public Service Commission (PSC), making full cost recovery less certain.
Fitch also pointed to cost overruns in the project as contributing to the credit downgrade:
Fitch is particularly concerned about the extent of the potential cost increase and the PSC’s willingness to have rate payers shoulder the entire burden.