Bill filed to protect ratepayers in future nuclear plant construction

Bill filed to protect ratepayers in future nuclear plant construction

Press Release
March 22, 2017

Columbia, SC—Richland County Representative Kirkman Finlay has filed legislation (H.4022) in the South Carolina House that would better protect electricity ratepayers in future nuclear plant construction. The bill would amend the Base Load Review Act (BLRA), which enables a utility company to increase rates annually to pay for the construction financing costs when building power plants.  The goal of the BLRA was to reduce the cost of nuclear plant construction.

South Carolina Electric and Gas (SCE&G) was the first to use the 2006 BLRA in the construction of two nuclear plants at its V.C. Summer Station in Fairfield County. The company has received heavy public criticism for the project which is more than two years behind schedule and $2.5 billion over budget.  Nine BLRA rate hikes have been approved raising consumer electric bills already by about 20% to pay only for the construction financing costs.

Last July the STOP THE BLANK CHECK Coalition was formed to advocate for change to the BLRA.  The coalition called for the BLRA amendments in H.4022 and believes that the amendments will result in better utility accountability, responsibility as well as better regulation of profits.  Only the Coalition’s amendment regarding contractual transparency was not include in the bill.

House Bill 4022 would not apply to SCE&G’s current nuclear plant construction or the financing of that project. The recent settlement approved by the SC Public Service Commission sets the parameters for the utility’s completion of those new nuclear plants at the V.C. Summer Station.

“The League of Women Voters of South Carolina applauds the work of Rep. Finlay in filing this important bill to protect South Carolina’s citizens,” said JoAnne Day, Co-President of the League. “It is fair that shareholders in the businesses that generate and distribute our electricity make a reasonable return on their investments. However, it is also fair that consumers not pay higher rates when project management decisions are not prudent and contribute to higher costs. These amendments to the Base Load Review Act will help to insure that in the future state regulators have better tools to give fair consideration to the interests of consumers.”

“The work of our Coalition laid the groundwork for the settlement with SCE&G in November that caps additional costs to ratepayers for the completion of the nuclear plants in Fairfield County,” said Frank Knapp Jr., president and CEO of the South Carolina Small Business Chamber of Commerce. “Now the coalition’s work on this bill will hopefully make the BLRA more consumer-friendly so that any future nuclear plant construction will not turn into a blank check for a utility.”

Members of the STOP THE BLANK CHECK Coalition are: South Carolina Small Business Chamber of Commerce South Carolina League of Women Voters National Association of Social Workers-SC Chapter Carolina Peace Resource Center Kingdom Living Temple New Alpha Community Development Corporation Sustainable Midlands The Whitney M. Slater Foundation                                                                  ###

STOP THE BLANK CHECK Coalition proposed amendments to the BLRA:

  1. Utility Accountability – Allow the use of the BLRA to recover construction financing costs only on the original PSC approved budget for construction.  Any construction financing costs for additional construction expenses will be recovered in a general rate proceeding requested by the utility. This will focus the utility on making the most prudent cost projections and construction decisions because the company will have its own finances on the line for cost overruns and delays.
  2. Utility Transparency – The SC Office of Regulatory Staff shall be an advisory-only party to all contractual negotiations and contract decisions for construction projects being submitted to the PSC for approval.  Such an advisory-only role by the Office of Regulatory Staff does not constitute its approval of any eventual contracts nor is it to be construed that any subsequent contracts are prudent.
  3. Utility Profit Regulation –  Allow the PSC to decide the utility’s Return on Equity under the BLRA.  This re-empowering of the PSC is essential to truly protect the consumers from a state-approved utility monopoly.
  4. Utility Responsibility – The utility shall demonstrate to the PSC the prudence of transaction costs, or decision by a preponderance of the evidence. Currently the burden to show that a construction decision is prudent is on a challenging party, not the utility.