State agency challenges nuke plant shutdown proposal, says ratepayers could be hurt

State agency challenges nuke plant shutdown proposal, says ratepayers could be hurt

The State
August 10, 2017

By SAMMY FRETWELL and JAMIE SELF

COLUMBIA, SC A state consumer agency took legal action Wednesday against SCE&Gs’s plan to charge customers for a nuclear expansion project the utility said had become too expensive to finish.

In asking state utility regulators to dismiss the SCE&G plan, the Office of Regulatory Staff said the power company’s proposal would limit the public’s right to challenge higher rates for the abandoned nuclear project in Fairfield County.

“It is going to be very difficult to challenge successfully the costs or the rates’’ if SCE&G’s plan is not tossed out by the state Public Service Commission, regulatory staff director Dukes Scott said

Stopping the power company’s plan also would give state officials time to study the fallout from the July 31 decision to quit the project, officials said. House Speaker Jay Lucas filed paperwork Wednesday with the PSC supporting the Office of Regulatory Staff.

Scott said his agency has not yet decided whether to oppose letting SCE&G bill customers for the abandoned project, but he said the process should be easier for people who want to challenge the power company’s plan.

The utility, which has more than 700,000 customers, did not respond to requests for comment from The State. Under South Carolina law, SCE&G has the right to seek reimbursement for what it has spent on the nuclear project – even though the company has no plans to complete construction work.

SCE&G and its partner, state-owned Santee Cooper, worked on the project for nine years and spent about $9 billion trying to build the two reactors at their V.C. Summer nuclear station northwest of Columbia.

Both utilities announced July 31 that they couldn’t finish the work affordably in the wake of chief contractor Westinghouse’s bankruptcy. Originally expected to cost about $11 billion, recent projections place the cost at more than twice that amount. Their decision sent shockwaves through South Carolina, where many people were depending on some 5,000 jobs created by the project and where ratepayers already have paid for part of the effort.

On Aug. 1, SCE&G asked the Public Service Commission to let it formally abandon the nuclear project – which is about 34 percent complete – and to recover $4.9 billion the investor-owned utility had spent through “revised rates’’ to customers.

Customers would be billed for 60 years to pay back the company and its stockholders, according to the plan. The two utilities have already hit customers with 14 rate hikes. The rate increases have generated about $2 billion. In SCE&G’s case, about $27 of the average person’s power bill goes to the now abandoned nuclear project.

Company officials said they would try to offset some impacts on ratepayers by using about $700 million pledged by Westinghouse’s financially troubled parent corporation, Toshiba.

Lucas, R-Darlington, filed a motion Wednesday with the PSC to join the Office of Regulatory Staff in its challenge to SCE&G. As written, SCE&G’s filing last week “could lead to an automatic rate hike for SCE&G customers without full litigation of all the issues surrounding the failure at VC Summer,’’ Lucas’ office said in a statement.

Gov. Henry McMaster and state lawmakers are now examining the fallout of the power company’s decision, and some are seeking ways to revive the nuclear project. The S.C. Public Utilities Review Committee, which examines energy issues, meets Aug. 23 and the Legislature also is mulling a special session.

Frank Knapp, who heads the S.C. Small Business Chamber of Commerce, applauded Wednesday’s regulatory staff filing. He said the regulatory staff office’s action, if successful, could limit the amount stockholders receive from customers through higher utility rates for the failed project. Stockholders now receive a 10.25 percent return on the project, but he suggested they may not need a percentage that high in the future.

“Given the controversy surrounding SCE&G’s performance on this project, the Public Service Commission must have unilateral ability to approve a far lower return on equity,’’ Knapp said in a letter to the PSC.

Scott’s office said SCE&G is using a section of state law that would effectively cut the public out of the process.

Under that section of the law, it would be up to the Office of Regulatory Staff and the public to prove that billing customers for the failed project is a bad idea. Otherwise, SCE&G would get the rate increases it needs to reimburse the company and its stockholders, the agency said.

“It would unduly put the burden’’ on ratepayers, Scott said. The company should use another section of the law that allows for more public participation, Scott said.

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