The S.C. House passed a bill repealing the Base Load Review Act and ending payments by S.C. Electric & Gas customers toward the failed V.C. Summer nuclear project on Wednesday.
The Ratepayer Protection Bill drops the 18% charge on SCE&G bills, or $37 million a month, for costs related to the twin 1,117-megawatt nuclear reactors in Fairfield County, and guarantees that no future utility projects can recover those costs. It also likely deals a blow to Virginia-based Dominion Energy’s proposal to acquire SCE&G parent company SCANA.
Dominion has said that its $14.6 billion proposal hinges on being able to recover the V.C. Summer costs from ratepayers, albeit for less time than SCE&G’s current payment structure and with a plan to provide refunds to ratepayers.
Dominion said it was reviewing the bill, H.4375, Wednesday afternoon.
“The House action, assuming it becomes law and survives legal challenges, could offer temporary relief for SCE&G customers, but unfortunately could threaten the permanent solution offered by Dominion,” the company said in a statement. “Regarding our combining with SCANA, as we have said from the beginning, any change in law that has a significant financial impact on our proposed transaction would create a path for Dominion Energy to walk away from our proposal and eliminate the immediate positive benefits for South Carolina.”
S.C. Gov. Henry McMaster has said he would sign legislation that refunded customers’ money and prevented any future V.C. Summer-related charges but veto any that “continues to place the financial burden of this corporate failure on South Carolina ratepayers,” McMaster said in last week's State of the State address.
SCANA may still be able to recoup costs from the project, but the bill would require the utility to prove to regulators that actions taken during the reactors' construction were prudent. The legislation would keep ratepayers from forking over more money while the S.C. Public Service Commission considers motions related to rate relief.
“Since last August, the House has worked diligently to develop a responsible plan forward that protects ratepayers and prevents them from paying for a failed nuclear project,” Speaker of the House Jay Lucas said in a statement. “Today, our members followed through with our commitment to halt SCE&G from recouping more of its customers’ hard-earned dollars for the failed V.C. Summer nuclear project.”
SCANA told the Columbia Regional Business Report the company would take action to protect its interests if necessary.
“There is a regulatory process in place for adjudicating the recovery of costs associated with the nuclear project,” Eric Boomhower, SCANA’s director of public affairs and corporate communications, said in an email. “SCANA and Dominion have filed a petition with the Public Service Commission that explains how a combination of the companies would result in significant benefits being provided to customers. In the event legislation is passed that interferes with the regulatory process and changes the legal standards for recovery of those costs in a way that would inflict severe damage on the company, the company would have no choice but to seek legal recourse at that time.”
The S.C. Chamber of Commerce greeted the bill’s passage with trepidation.
“The business community purchases 52% of SCE&G’s power and is supportive of cuts for ratepayers but cannot support this bill in its current form, as it may actually create long-term regulatory issues that could drive up costs and slow potential private sector investment,” Jack Sanders, chamber chairman and CEO of Sonoco, said in a statement. “S&P and Moody’s have both clearly communicated concerns over provisions in H.4375 that would retroactively undo a law, creating an unstable environment for investment.”
SCE&G and state-owned utility Santee Cooper, co-owner of the project, poured $9 billion into the reactors before multiple delays and rising costs led contractor Westinghouse to file for bankruptcy last April. SCE&G and Santee Cooper abandoned the project in July.
SCANA sought and received nine rate increases during the reactors’ decades-long construction under the BLRA, a law passed in 2007 that allowed the utility to raise rates to pay for the reactors before they were finished.
SCANA has predicted dire financial consequences if the BLRA is repealed and hotly disputed an audit by the Office of Regulatory Staff that found only a 35% chance of bankruptcy for the utility in that event.
SCANA’s board voted in favor of the Dominion proposal earlier this month.
The stock-for-stock merger would reduce the average SCE&G customer’s rates by 5%, or more than $7, a month. A $1.7 billion-plus write-off of existing V.C. Summer capital and regulatory assets would eliminate all customer costs related to the project over 20 years. That’s faster than the 50- to 60-year period proposed in a November offer from SCE&G, which would have reduced annual rates by 3.5%.
Dominion has also promised a $1.3 billion cash payment to refund SCE&G ratepayers within 90 days of the merger’s completion. The utility would work with state regulators to determine refund amounts based on usage.
A residential customer with an average $150 bill could get around $1,000, Chet Wade, Dominion’s vice president of corporate communications, said earlier this month.
“When we first approached SCANA, our goal was to propose a solution that provided a path forward for their customers and the state of South Carolina,” Dominion’s statement said. “We continue to believe our proposal offers the best and most-certain long-term relief for customers — $1.3 billion in cash payments, a permanent rate reduction and rate stability for the future.”