After hearing testimony Wednesday from the Office of Regulatory Staff, Sen. Shane Massey concluded that the watchdog organization never had a chance to protect the public interest with regard to the failed V.C. Summer Nuclear Project.
“The deck was stacked against you from the beginning,” Massey, R-Edgefield, and co-chairman of the V.C. Summer Nuclear Project Review Committee, told Nanette Edwards, ORS executive director, in a discussion of the Base Load Review Act. The controversial law, passed in 2007, allowed SCANA subsidiary S.C. Electric and Gas to raise its rates as the unfinished nuclear reactors were constructed. “My impression is decisions were already being made before ever getting to the Public Service Commission.”
The BLRA essentially shifted the burden of proving whether a project is prudent from the utility to state regulators. With the act’s passage, the Public Service Commission declared upfront that the nuclear reactor project was prudent, and subsequent rate increases could be approved unless it could be shown that SCE&G’s actions no longer met that definition.
The law also allows SCE&G to make a profit off any money it invested in the project — around $4.9 billion of the combined $9 billion spent by SCE&G, a 55% percent owner of the project, and state-owned utility Santee Cooper, owner of the other 45%. SCE&G borrowed some of the money, and some came from SCANA stockholders. The BLRA allows ratepayers to be charged for that money, plus the interest SCE&G has to pay on it, plus the return on that investment, which currently is set at 10.25%.
The two 1,117-megawatt reactors, being built near Jenkinsville, were abandoned after contractor Westinghouse filed for bankruptcy in April. Santee Cooper and SCE&G then pulled out of the project. V.C. Summer’s Nuclear Station’s Unit 1 continues in operation, with its license extended through 2042.
The ORS’ charge is to represent the public interest in utility regulation before the Public Service Commission and other organizations. Wednesday’s hearing, the latest in a round of legislative question-and-answer sessions with players in the abandoned V.C. Summer project, focused on why no red flags were raised sooner about the project as costs spiraled and delays lengthened.
“The customer never had a chance,” Massey said. “This act guarantees a rate of return and (SCE&G) gets their money back if the project is abandoned. There is no risk to the investor, and ratepayers will continue to pay for something they will never get.”
Massey asked if, when the Public Service Commission first approved the reactors, the burden to prove prudence was on the utility. Edwards said it was at the beginning, but once construction began, that burden flipped to ORS.
“With regards to other cases, outside the Base Load Review Act, the burden is on the utility,” Edwards said. “In the case of SCE&G, I don’t think the commission was rendered unable to make a decision, but you have to prove imprudence of the utility, and that can be hard.”
Edwards said SCE&G’s failure to disclose requested information to the ORS made the organization’s job harder.
“When we ask for records, we expect them to be provided,” Edwards said. “We sent folks out onsite to make verbal inquiries. We believed at the time we asked sufficient questions in order to get the information we needed.”
Edwards said the Office of Regulatory Staff is in favor of preserving V.C. Summer to eventually be completed, but Anthony James, director of energy policy in ORS’ New Nuclear Development & Energy Office, painted a grim picture of a possible restart.
“We walked the site two weeks ago, and it looks like (SCE&G) are moving toward abandonment,” James said. “There has been little to no maintenance around the site and materials are not being covered. Most of the heavy machinery is being removed.”
Sen. Michael Fanning, D-Fairfield, said that the testimony previously given by SCE&G and Santee Cooper led him to believe that parts wouldn’t be sold off and materials would be kept preserved.
ORS and Friends of the Environment, along with the Sierra Club, both have pending filings with the Public Service Commission concerning SCE&G. ORS’ case deals with rate relief, while Friends of the Earth wants a suspension of revised rates, a full stop of spending on the plant and reparations of the money currently spent. Both cases are to be heard in December.