A South Carolina utility told a federal judge on Monday that it played by the rules, so lawmakers should too, even if it means saddling customers with billions of dollars of debt from a failed nuclear project.
South Carolina Electric & Gas Co. wants the judge to stop a temporary 15 percent rate cut, which would begin appearing on bills next week. The cut, passed by lawmakers earlier this summer, would be retroactive to April and reduce a residential customer’s monthly electricity bill by about $25 on average.
Customers have already paid about $2 billion for two additional nuclear reactors at the V.C. Summer Nuclear Station, which were abandoned a year ago Tuesday without ever generating power after a decade of planning and construction. For at least a few months, the rate cut would keep ratepayers from having to pay even more to help utilities pay off their debts.
SCE&G is suing the Public Service Commission. The General Assembly has sided with regulators to keep the rate cut in place, filing as interveners in this federal case.
SCE&G said it followed the 2007 Base Load Review Act, which allowed it to charge consumers for their construction before the reactors were ever in use and continue to collect even if the project wasn’t completed, utility attorney David Balser said.
“We are here because the General Assembly has changed the rules of the game after the game has already been played,” Balser said.
Attorneys for state lawmakers accused SCE&G and its parent company SCANA Corp. of caring less about its customers than profits for executives and shareholders. SCANA shareholders meet Tuesday in Columbia to vote on whether to merge with Virginia-based Dominion Energy.
Rob Tyson, who represents House lawmakers, rebutted that assertion, arguing that the utility has a very high threshold to get the new laws declared unconstitutional and that SCE&G’s statements about the legislation potentially threatening the Dominion deal’s viability – despite continued reassurances by Dominion executives – show SCE&G “cries wolf too loudly.”
“This isn’t a game at all,” Tyson said. “We are dealing with the ratepayers’ hard-earned money, and it’s going toward a project that failed.”
As lawmakers worked to deal with the mess, SCANA put aside $110 million into an irrevocable trust to pay key executives and facilitate the company’s merger plans. SCANA also paid out around $80 million to its shareholders for each of the three quarters following the abandonment, Senate lawyer Matthew Richardson said.
“It’s been great to be a SCANA shareholder while the nuclear plant was being constructed,” Richardson said.
A top executive at SCANA testified Monday that, in addition to reducing SCE&G’s revenues by about $30 million each month, the temporary rate cuts would slash investors’ return on equity, thus potentially making it harder for the company to attract and keep investors. Iris Griffin, who became SCANA’s chief financial officer in January, also noted that SCANA was downgraded to junk status in February, therefore making it more difficult for the company to raise capital.
But those problems, both Richardson and House lawyer Bobby Stepp pointed out, were in place well before the new laws over which the utility is suing.
“This didn’t pop up in June or July of this year,” Stepp said, noting the timeframe in which the laws were passed. Stepp also pointed out that the amount SCE&G would lose under the temporary reduction – around $270 million – is a mere fraction of the company’s 2017 operating revenues of more than $4.4 billion.
The nuclear project was a joint venture between SCE&G, which held 55 percent, and state-owned Santee Cooper, whose 45 percent share also falls on state taxpayers and ratepayers.