Energy holding company, SCANA Corporation’s SCG principal subsidiary – South Carolina Electric & Gas Company (“SCE&G”) – filed for a total increase of 2.78% to its approved electric rates under provisions of a state law known as the “Base Load Review Act” or BLRA. SCE&G applied to the Public Service Commission of South Carolina and the South Carolina Office of Regulatory Staff for the aforesaid hike in the rates.
The BLRA significantly lowers the construction cost of nuclear power plants in South Carolina. This is mainly because the state’s regulated utilities have been permitted to amend rates annually during the building of such plants to recover associated financing expenses.
The payment of financing costs during the construction period, instead of waiting for project completion, reduces the cost of building the new units by around $1 billion. This, therefore, lowers the sum that customers have to pay through rates for associated costs such as the cost of capital, depreciation, property taxes and insurance related to the project.
Per estimations by SCE&G, this method effectively leads to a saving of about $4 billion for its customers in electric rates over the life of the new units.
Two nuclear electric-generating units are being constructed jointly by SCE&G and state-owned utility Santee Cooper at the V.C. Summer Nuclear Station near Jenkinsville, SC.
Scana’s operations include generation, transmission, distribution, and sale of electricity to retail and wholesale customers in South Carolina. The company also purchases, sells, and transports natural gas to retail customers in South Carolina and southeastern Georgia. Moreover, Scana provides energy-related risk management services as well as acquires, owns, and provides financing for nuclear fuel, fossil fuel, and emission allowances. In addition to these, it offers fiber optic communications, Ethernet services, and data center facilities.
Scana currently carries a Zacks Rank #2 (Buy). Some other players that are worth considering from the same space include Transmontaigne Partners L.P. TLP, LRR Energy, L.P. LRE and Pembina Pipeline Corporation PBA. All these stocks sport a Zacks Rank #1 (Strong Buy).
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