August 04, 2017
Columbia Business Report
By Chuck Crumbo
Republican and Democratic leaders of the South Carolina Senate today called for a special session of the General Assembly to take up a joint resolution to block further electric rate increases for SCE&G and Santee Cooper customers until the legislature has a chance to act during the 2018 session.
Reacting to Monday’s announcement that the companies abandoned the unfinished reactor project at V.C. Summer Nuclear Station, GOP Majority Leader Shane Massey and Democratic Minority Leader Nikki Setzler, asked that the General Assembly consider a joint resolution suspending the authority to Santee Cooper and the Public Service Commission “to act on the V.C. Summer project or authorize electricity rate increases.”
The letter, asking Senate Pro Tem Hugh Leatherman and House Speaker Jay Lucas to reconvene the General Assembly, is the latest development as S.C. government officials react to SCE&G and Santee Cooper’s stunning announcement that they were shutting down project, which already had cost more than $9 billion.
On Wednesday, more than 50 members of the legislature announced the formation of a bipartisan Energy Caucus to investigate the decision to build two reactor units and what changes in state law might be needed to blunt rate increases that generations of South Carolinians may have to shoulder to cover the project’s cost.
In addition, S.C. Sen. Tom Alexander agreed to a request from Sen. Luke Rankin to call a special meeting of the Public Utilities Review Committee on Aug. 23 to explore circumstances that led South Carolina Electric & Gas and Santee Cooper to abandon the project.
“As the Republican and Democratic leaders of the Senate, we and the members of our caucuses are greatly concerned by the announcement earlier this week by SCANA (parent of South Carolina Electric & Gas) and Santee Cooper” that the project be abandoned.
“That decision resulted in some 6,000 jobs being lost immediately, impacting families throughout the Midlands and economic development statewide,” the letter said. “Additionally, it has been indicated that SCANA and electric cooperative customers could be stuck with the substantial rates they have been paying to finance construction of the project and required to pay even more for the utilities to recover their losses.”
In another development, Frank Knapp, president and CEO of the South Carolina Small Business Chamber of Commerce, has petitioned the Public Service Commission to intervene in SCE&G’s filing for abandoning its nuclear construction project.
“It is imperative that small business ratepayers be adequately represented in the negotiation process regarding SCE&G’s decision to abandon the construction of two nuclear plants in Fairfield County,” Knapp said in a statement.
Knapp has intervened for over 15 years in SCE&G cases in front of the Public Service Commission. He most recently intervened in the company’s 2016 request for more construction costs for the nuclear project. He was one of the signatories of the settlement eventually reached with SCE&G that capped the nuclear construction costs the ratepayers would be responsible for.
“Small business ratepayers have already paid enough for this failed project. Obtaining rate relief for consumers will be my primary objective,” Knapp said.
Originally advertised to cost $9.8 billion in a press release announcement the project in March 2008, the budget was set at more than $11 billion when state regulators green-lighted the project in 2009. The price climbed over $14 billion in 2016 when the commission approved cost overruns.
But as the project fell further behind and the contractor Westinghouse Electric’s filing for Chapter 11 bankruptcy protection in March, workers drilled down into the numbers and estimated that the project would eventually cost $20 billion when completed.
The price was too steep for Santee Cooper, which owned 45% of the project, and decided to suspend its participation. Without a partner, SCE&G said it had no choice but to walk away.
Under the state Base Load Review Act, SCE&G can recover what it has spent on the abandoned project. However, the company said it plans to use about $1.2 billion — its share of the $2.2 billion settlement from Westinghouse’s parent, Toshiba Corp., as well as benefits derived from tax deductions to mitigate rate increases for several years, according to a news release. SCANA said its cost of the project will be amortized over 60 years.
SCE&G electricity customers have been hit with nine rate increases totaling 18% since state regulators approved the project in early 2009.