SCANA : Settlement Agreement Related to Election of Fixed Price Option and Petition to Update Construction and Capital Cost Schedules for New Nuclear Units

shudson@regstaff.sc. gov

Sfuuuum 91

!l>e.putlj eJu4 &un..,el f-a4

September 1, 2016

Jocelyn G. Boyd, Esquire Chief Clerk & Administrator

Public Service Commission of South Carolina 101 Executive Center Drive, Suite 100 Columbia, South Carolina 29210

Re: Petition of South Carolina Electric & Gas Company for Updates and Revisions to Schedules Related to the Construction of a Nuclear Base Load Generation Facility at Jenkinsville, South Carolina

Docket No. 2016-223-E

Dear Ms. Boyd:

Please find enclosed a Settlement Agreement with two Exhibits executed by:

1. South Carolina Office of Regulatory Staff ("ORS");

2. Central Electric Power Cooperative, Inc.;

3. The Electric Cooperatives of South Carolina, Inc.;

   ;

4. Frank Knapp, Jr1

5. South Carolina Energy Users Committee; and,

6. South Carolina Electric & Gas Company.

The Settlement Agreement resolves all issues of the signing parties in this docket. Also enclosed is the Settlement and Direct Testimony and Exhibits of ORS witness Allyn Powell and the Direct Testimony and Exhibit of ORS witness Gary C. Jones.

1 Pro se and President and CEO of the South Carolina Small Business Chamber of Commerce.

Letter - Jocelyn G. Boyd, Esquire September l, 2016

Page 2 of 2

Thank you for your consideration regarding this matter and should you have any questions, please do not hesitate to contact me.

Sincerely,

Shannon Bowyer Hudson

Enclosures

cc: K. Chad Burgess, Esquire (via E-Mail & U.S. Mail)

Matthew W. Gissendanner, Esquire (via E-Mail & U.S. Mail) Belton T. Zeigler, Esquire (via E-Mail & U.S. Mail)

Michael N. Couick, Esquire (via E-Mail & U.S. Mail) Christopher R. Koon, Esquire (via E-Mail & U.S. Mail) Frank R. Ellerbe, III, Esquire (via E-Mail & U.S. Mail) John H. Tiencken, Jr., Esquire (via E-Mail & U.S. Mail) Paul J. Conway, Esquire (via E-Mail & U.S. Mail) Damon E. Xenopoulos, Esquire (via E-Mail & U.S. Mail) Eleanor Duffy Cleary, Esquire (via E-Mail & U.S. Mail)

1. Blanding Holman, IV, Esquire (via E-Mail & U.S. Mail) Robert Guild, Esquire (via E-Mail & U.S. Mail)

   Scott Elliott, Esquire (via E-Mail & U.S. Mail) Sandra Wright (via E-Mail & U.S. Mail)

   Frank Knapp, Jr. (via E-Mail & U.S. Mail)

   Joseph Melchers, Esquire (via E-Mail & U.S. Mail)

   BEFORE

   THE PUBLIC SERVICE COMMISSION OF SOUTH CAROLINA

   DOCKET NO. 2016-223-E

   September 1, 2016

   IN RE:

   )

   Petition of South Carolina Electric & Gas ) Company for Updates and Revisions to ) Schedules Related to the Construction of a ) Nuclear Base Load Generation Facility at ) Jenkinsville, South Carolina )

   )

   SETTLEMENT AGREEMENT

   This Settlement Agreement ("Settlement Agreement") is made by and among the South Carolina Office of Regulatory Staff ("ORS"); the Central Electric Power Cooperative, Inc. ("Central"); the Electric Cooperatives of South Carolina, Inc. ("The Cooperatives"); Frank Knapp, Jr1; South Carolina Energy Users Committee ("SCEUC"); and South Carolina Electric & Gas Company ("SCE&G" or the "Company'') (collectively referred to as the "Parties", "Settling Parties", or sometimes individually as a "Party").

   WHEREAS, on May 26, 2016, SCE&G filed a petition ("Petition") with the Public Service Commission of South Carolina ("Commission") requesting an order from the Commission approving SCE&G's updated capital cost schedule and updated construction schedule for the construction of two 1,117 net megawatt nuclear units ("Units" or "Units 2 and 3") to be located at the V.C. Summer Nuclear Station near Jenkinsville, South Carolina, as well as the Commission's approval of SCE&G's decision to exercise an option ("Option") in the October 2015 Amendment

   1 Pro se and President and CEO of the South Carolina Small Business Chamber of Commerce.

   ("Amendment") to the Engineering, Procurement and Construction Agreement (the "EPC Contract") that would move many of the EPC Contract costs to a fixed price category;

   SCE&G filed its Petition pursuant to S.C. Code Ann. § 58-33-270(E) (2015) of the Base Load Review Act ("BLRA"), which states:

2. As circumstances warrant, the utility may petition the commission, with notice to the Office of Regulatory Staff, for an order modifying any of the schedules, estimates, findings, class allocation factors, rate designs, or conditions that form part of any base load review order issued under this section. The commission shall grant the relief requested if, after a hearing, the commission finds:

3. as to the changes in the schedules, estimates, findings, or conditions, that the evidence of record justifies a finding that the changes are not the result of imprudence on the part of the utility; and

4. as to the changes in the class allocation factors or rate designs, that the evidence of record indicates the proposed class allocation factors or rate designs arejust and reasonable.

5. SCE&G states in its Petition that circumstances warrant modifying the schedules approved in the most recent Base Load Review order because in September 2015 Westinghouse Electric Company ("WEC") and Chicago Bridge & Iron ("CB&I") ("Consortium") approached SCE&G and Santee Cooper about CB&I's desire to exit the project. Negotiations ensued leading to an agreement reached on October 27, 2015, between SCE&G and WEC to amend the EPC Contract. The Amendment allowed CB&I to exit the project and required WEC to assume sole responsibility for the project going forward. WEC additionally granted SCE&G an option to convert the EPC Contract to a "fixed-price" agreement that incorporated many of the EPC Contract costs into a total fixed price;

   SCE&G has requested Commission approval of an updated Milestone Schedule (Exhibit 1 to the Application) which reflects new guaranteed substantial completion dates ("GSCDs") for Units 2 and 3 of August 31, 2019, and August 31, 2020, respectively;