SCANA Requests To Pull Out COLs For VC Summer Station Units
Zacks Investment Research | Jan 01, 2018 08:49PM ET
SCANA Corporation’s (NYSE:SCG) principal subsidiary — South Carolina Electric & Gas Company (“SCE&G”) — has formally filed a request to withdraw the combined operating licenses (COLs) for VC Summer Station Units 2 & 3 with the Nuclear Regulatory Commission (NRC).
This news follows NRC’s announcement that SCANA has stopped construction activities on the VCS Units 2 and 3 sites in Jul 31, 2017. This notification is in line with the company’s strategy to abandon and qualify for a tax deduction in 2017. The tax deduction will help the company garner about $2 billion, which will offset the costs of the nuclear project.
Per the notification to the NRC, SCE&G has stated that it has permanently abandoned interests in the VCS Units 2 and 3. The company has stopped all completion and preservation activities. Operations is only restricted to putting the site in a secure state, end construction and close active permits.
SCE&G has offered to relinquish abandoned interest in the VCS Units 2 and 3 projects to Santee Cooper, for no consideration. If the company opts to become the sole licensee for the project, before the NRC approves this request to withdraw the COLs, SCE&G will forward an application to the NRC to transfer the licenses to Santee Cooper.
About SCANA
SCANA is positioned in a positive regulatory environment, courtesy of a low risk business with outstanding customer growth and operational efficiency. These are favorable for stable cash flow generation and growth. Another positive for shareholders is SCANA’s utility business mix. The majority of the company’s total earnings come from the regulated electricity and natural gas utilities business.
However, SCANA has already incurred significant costs for the construction of the VCS Units 2 and 3. Thus, future earnings growth of the company looks uncertain.
Price Performance
SCANA’s shares have lost 18.1% compared with the Zacks Investment Research
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