Deal to lower SCE&G rates faces opposition

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A deal struck by a joint legislative committee that would temporarily lower S.C. Electric & Gas customers’ bills by 15% appears to stand little chance of being approved by S.C. Gov. Henry McMaster and has drawn the ire of a suitor for embattled SCE&G parent company SCANA.

McMaster has vowed to veto any legislation that does not totally eliminate the 18% increase in SCE&G ratepayers’ bills stemming from the failed V.C. Summer nuclear reactor project.

“The governor has said from day one that he will veto any legislation that reaches his desk and doesn’t completely eliminate the nuclear surcharge, and he’s going to keep that promise because no South Carolinian should be forced to pay another dime for nuclear reactors they will never get,” McMaster spokesman Brian Symmes said via email.

The deal reached by a joint Senate and House conference committee Wednesday would also delay potential Public Service Commission regulatory approval of a proposed $14.6 billion merger between Virginia-based Dominion Energy and SCANA until December. Dominion has previously declared that timetable unworkable and reiterated that position Wednesday.

“The South Carolina Legislature is playing a high-stakes game where they are gambling with the money of customers and taxpayers,” Dominion CEO Tom Farrell said via email. “Legislators are risking cash payments to SCE&G’s electric customers of $1.3 billion — equal to $1,000 for the typical residential customer — and a permanent rate reduction of 7%. They are jeopardizing total customer benefits of more than $12 billion and another $19 billion in economic activity. And, they are promoting continued turmoil for South Carolina’s energy and business future. All of this for a few headlines and a temporary rate reduction that has good odds of being overturned in court. It is a disappointing and short-sighted action that is counter to the best interests of South Carolina and its people.”

After Wednesday morning’s deal cleared the joint committee, the bills — H.4375 and S.954 — were sent to specially called meetings of the S.C. House and Senate. The Senate adopted S.954, 41-0, and later adopted H.4375 by a 37-2 vote.

Later Wednesday, the House voted to adopt S.954 by a 115-0 vote and H.4375 by a 109-4 vote.

H.4375 previously passed both the House and Senate, but was sent to committee to resolve disputes over amendments. S.954 passed the Senate in April but had not received House approval because that body said it did not cut rates enough.

A central component of H.4375 is a repeal of the Base Load Review Act, a controversial 2007 state law that allowed SCANA to request and receive nine rate increases before the reactors’ construction was complete. Those increases saddled SCE&G customers with a combined $37 million a month in V.C. Summer-related debt, and while Dominion’s proposal would reduce the cost and shorten the life of the debt, the Virginia company has said it must continue to be allowed to recoup the costs of the failed nuclear project from ratepayers.

In a spirited back-and-forth, Sen. Brad Hutto, D-Orangeburg, told Sen. Shane Massey, R-Edgefield, and co-chair of the Senate’s V.C. Summer Nuclear Project Review Committee, that he was not willing to take the risk of Dominion walking away if H.4375 passed.

“They’re not getting run off by my vote,” said Hutto, who proposed waiting until the PSC takes action in December. “We could do nothing and do no harm.”

Massey countered that repealing the BLRA should not hinge on the actions of one company.

“They don’t get to dictate what the law should be, (and) what we discovered over the last year is that the law is wrong,” Massey said.

H.4375 also establishes a definition of “prudency,” the standard a utility must meet to receive rate increase approval, and creates a consumer advocate’s office. It also gives the state Office of Regulatory Staff subpoena power and removes a requirement that that body look out for utilities’ financial interests.

Rep. Kirkman Finlay, R-Columbia, stressed the importance of defining prudency in addressing the House.

“If you are not making a prudent and thoughtful business decision, you’re in the wrong. … This will be a tiger that is toothless without these definitions,” Finlay said.

SCE&G owned 55% of the twin nuclear reactors abandoned in July 2017 after 10 years of construction and a series of delays and cost increases.

State-owned utility Santee Cooper, owner of the other 45% of the project, is facing lawsuits and a potential state-initiated sale over its ratepayers’ share of V.C. Summer debt. In March, the Electric Cooperatives of South Carolina hired Hutto to serve as a consultant in that organization’s lawsuit against Santee Cooper.

The two utilities poured $9 billion into the construction of the now-abandoned reactors. While SCE&G customers have already shelled out $2 billion related to that debt, an analysis by think tank Palmetto Promise Institute released Wednesday estimated that Santee Cooper’s ratepayers’ share could triple that during the life of the debt, reaching more than $50,000 per customer.