The S.C. Legislature signaled resounding approval for a deal struck Wednesday by a joint legislative committee, easily passing two bills that address fallout from the failed nuclear reactor project at the V.C. Summer power station. But the bills faced a gubernatorial veto and could scuttle a proposed merger between Cayce-based utility SCANA and Virginia-based Dominion Energy that has promised rebates and rate relief to customers of SCANA subsidiary SCE&G.
The joint committee hammered out sticking points with the bills, H.4375 and S.954, during a specially called session and sent them on to the full S.C. Senate and House. Both chambers adopted the measures, though not without a bit of drama, and sent them to Gov. Henry McMaster’s desk.
As promised, McMaster vetoed H.4375 late Thursday, but the Legislature swiftly overrode that action.
SCANA immediately indicated its intent to challenge a portion of the deal that would temporarily lower SCE&G customers’ bills by 15%, saying it was evaluating its legal options in response to the action. The company said in a news release that it and SCE&G believe a state-mandated reduction in the rates it collects under a controversial S.C. law is unconstitutional.
SCE&G owned 55% of the failed V.C. Summer nuclear project, which was abandoned last July after the utility and co-owner Santee Cooper had poured $9 billion into its construction. Those costs continue to have widespread ramifications.
On Thursday, SCANA announced an 80% reduction in its quarterly dividend for the quarter ending June 30. The cash dividend, payable July 18 to shareholders of record on July 10, was reduced to 12.37 cents per share from the 62.15 cents per share paid on the company’s common stock for the first quarter of 2018.
“The board made this reduction to preserve its options as the company continues to seek a resolution to the recovery of costs for the V.C. Summer new nuclear construction project,” SCANA said in a news release.
McMaster repeatedly vowed to veto legislation that does not eliminate all of the 18% increase the utility’s ratepayers have been saddled with in the wake of the V.C. Summer debacle.
“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 Wednesday.
Another provision in the bills delays action on a proposed $14.6 billion merger between SCANA and Dominion until December, a move some legislators have said is necessary to give the S.C. Public Service Commission enough time to fully evaluate the proposal. 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% (and) 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.”
Legislators didn’t see it that way. The Senate adopted S.954, which establishes the experimental rate for SCE&G customers and delays regulatory approval of the Dominion merger, by a 41-0 vote and adopted H.4375, which redefines the roles of the PSC and the Office of Regulatory Staff and repeals a state law that allowed SCANA to request and receive nine rate increases related to failed project, by a count of 37-2.
The House adopted S.954 by a 115-0 vote and H.4375 by a 109-4 tally.
“I intend to vote for this, and if I was governor, I would not veto this,” Rep. Kirkman Finlay, R-Richland, said in addressing the House.
The Senate vote on H.4375 came after a filibuster by Sen. Brad Hutto, D-Orangeburg. Earlier, Hutto engaged in a spirited exchange with Sen. Shane Massey, R-Edgefield and co-chair of the Senate’s V.C. Summer Nuclear Project Review Committee.
A central component of H.4375 is a repeal of the Base Load Review Act, the 2007 law that paved the way for multiple rate increases before the nuclear reactors’ construction was complete. Those increases left SCE&G customers with $37 million a month in V.C. Summer-related debt, and while Dominion’s proposal would reduce the cost and shorten the life of that debt, the Virginia company has said it must be allowed to recoup costs of the failed nuclear project from ratepayers.
Hutto told Massey he was not willing to take the risk of Dominion walking away from the proposed merger in response to legislative action.
“They’re not getting run off by my vote,” Hutto said.
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 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.
H.4375 also establishes a definition of “prudency,” the standard a utility must met in order to receive rate increase approval, and creates a consumer advocate’s office. It also gives ORS subpoena power and removes a requirement that that body look out for utilities’ financial interests.
SCE&G owned 55% of the twin nuclear reactors abandoned in July 2017 after 10 years of construction and a series of delays and rising costs. State-owned utility Santee Cooper, owner of the other 45% of the project, is facing lawsuits and a potential state-initiated sale.
While SCE&G customers have already shelled out $2 billion related to project debt, an analysis by think tank Palmetto Promise Institute released Wednesday estimated that the share shouldered by Santee Cooper ratepayers could triple that, reaching more than $50,000 per customer over the life of the debt.