SCE&G customers could see an 18 percent drop in their power bills if the state Public Service Commission agrees with a request to stop charging people for the costs of a failed nuclear reactor project in Fairfield County.
The S.C. Office of Regulatory Staff asked Tuesday that the PSC suspend rates now being charged for the V.C. Summer expansion northwest of Columbia. If the PSC approves the request, that would mean a $27 drop in the average residential power bill, the regulatory staff office said.
Tuesday’s request, however, carries potentially bigger financial returns for customers who already have been billed $1.7 billion for the twin reactors, which were to produce electricity for the Columbia and Charleston areas.
In addition to seeking to suspend rates now being charged for the reactors, the request asks the PSC to give credit or refunds to customers for charges they’ve paid over the past nine years. The latter request is contingent on either the Legislature rolling back the law that allowed customers to be charged for the reactors or a court ruling the law unconstitutional.
Dukes Scott, director of the Office of Regulatory Staff, said an opinion by Attorney General Alan Wilson sparked his agency’s request. Wilson’s office on Tuesday called portions of the law that allowed SCE&G to charge customers for the project “constitutionally suspect.’’
The law, the Base Load Review Act of 2007, made it easier for SCE&G to finance the twin reactor project. Already, the company has charged its customers more than $1.7 billion for the project through nine rate increases, and has indicated it would seek up to $2.2 billion more from customers to pay back what the utility has spent from its own funds.
“I feel like we are doing what we have to do,’’ Scott said.
SCE&G spokesman Eric Boomhower said Tuesday night that his company would “vigorously contest” the Office of Regulatory Staff’s request.
SCE&G and junior partner Santee Cooper quit the project July 31 after chief contractor Westinghouse filed for bankruptcy. The companies had spent $9 billion on the effort and collectively raised rates 14 times before pulling the plug, citing rising costs.
The S.C. attorney general’s opinion was released the same day the State Law Enforcement Division announced it would begin a criminal investigation of SCANA and its principal subsidiary, SCE&G.
SLED’s announcement was a response to a request by S.C. House Speaker Jay Lucas, R-Darlington. His request in a Sept. 25 letter alleged SCANA and SCE&G had possibly committed “criminal fraud through the concealment of material information” about the project’s “disastrous collapse.” Federal authorities already are looking into the matter.
SCANA said later Tuesday it and SCE&G “intend to cooperate fully” with the SLED investigation.
In releasing his office’s opinion on the 2007 law, Wilson personally blasted the project as “a money pit.” Power company ratepayers have “paid billions of dollars and got absolutely nothing,” he said.
“This opinion is as clear as I had hoped,” said Rep. James Smith, D-Richland, one of the four lawmakers who asked for it.
Smith said the 57-page opinion likely will be the basis of a future state law aimed not only at preventing the two power companies from forcing ratepayers to continue paying for the defunct project, but also at forcing the companies to refund money that ratepayers already have forked over to the companies to build the project.
An attorney general’s opinion is not legally binding. A court could rule differently. But an attorney general’s opinion is regarded as a well-researched analysis of the law and often used as guidance by lawmakers.
The 2007 law that was passed overwhelmingly by the General Assembly allowed the failed nuclear reactors to begin being built. Specifically, the law gave SCANA and SCE&G the authority to hike customer rates and use that money to pay for the construction effort.
However, according to the attorney general’s opinion, since the nuclear project has failed, it is “constitutionally suspect” to allow SCE&G to continue to bill customers for the project’s construction costs.
The opinion says the South Carolina constitution does allow the General Assembly to regulate publicly owned and private utilities “to the extent required by the public interest.”
But, the opinion says, “It cannot be considered to be ‘in the public interest’ to charge ratepayers for capital costs of an unfinished and abandoned plant,” and, “It is not ‘in the public interest’ to increase the power bills of consumers who receive nothing in return.”
A Santee Cooper spokeswoman said Tuesday the Base Load Review Act does not pertain to Santee Cooper, a state-owned utility and partner in the project. State law allows Santee Cooper to “increase rates to cover expenses as outlined in our enabling legislation, and that could include costs related to nuclear,” she said.
The idea behind the law’s allowing the companies to bill ratepayers in advance was to prevent larger rate hikes once the nuclear reactors went online, the opinion said. The reactors were supposed to be finished by 2020, but construction was far behind schedule.
The opinion pointed out that the 2007 law actually “rewards abandonment of nuclear projects” and can force ratepayers to pay the utilities’ costs “plus a substantial rate of return for investors without receiving any service from the plants.”
That provision might be seen by a court as an unconstitutional “taking” of property for private use, which violates the U.S. Constitution and a similar provision in the South Carolina Constitution, the opinion said.
The opinion also looked at whether it would be constitutional for state lawmakers to retroactively change the Base Load Review Act. The opinion concluded that if the Legislature does act, it could do so constitutionally if lawmakers balance consumer and investor interests to avoid creating a “‘taking’ from either side.”