Statehouse Report
September 30, 2016
By Michael N. Couick, special to Statehouse Report
The consumers’ advocates at the state Office of Regulatory Staff negotiated an important settlement that could have a positive effect on millions of South Carolina electricity users, and we hope the state Public Service Commission will agree.
The agreement was reached between SCE&G and a number of parties, including electric cooperatives, that intervened in an SCE&G request to the PSC about construction contract changes for two nuclear power units being built near Columbia. The agreement grew out of SCE&G’s request for a so-called “fixed price option,” which the utility claimed would provide more cost-certainty for a project that has gone several billion dollars over budget so far.
Some have voiced opposition to the request. That opposition ignores one undeniable need: the nuclear units simply must be built. The 1.3 million residents who use power provided by electric cooperatives cannot afford to strand billions of dollars of unproductive concrete and steel already in the ground near Jenkinsville. We must find the best way to finish building the units while limiting their costs.
Why is this important to our consumers? Twenty independent, member-owned electric cooperatives sell power in all 46 of the state’s counties. They buy more than half the kilowatt-hours of electricity produced by Santee Cooper, which is building the V.C. Summer Nuclear Station Units 2 and 3 with SCE&G. Through their power supply contract, electric cooperatives also pay about 70 percent of Santee Cooper’s capital costs. So, when Santee Cooper is building a multi-billion dollar nuclear plant, the costs of construction— not solely the rates resulting from it—are very important to our members.
Electric cooperatives intervened in the case to ensure that we had access to valuable data about costs and schedules. We wanted to better understand the reasons for the proposed cost estimate changes to determine if they were prudent and necessary changes, especially those related to the “fixed price option.”
We reviewed filings and quarterly reports. We met with representatives of SCE&G and Santee Cooper and heard directly from them why they advocated approval of the fixed price option and why it is the best approach available at this time for completing the project on time and without more cost increases.
The primary reason we support the settlement, however, is that we are convinced the Office of Regulatory Staff, the consumers’ advocate, has done a thorough—and thoroughly professional—job of examining the petition and the issues it raises, and has negotiated an agreement that is very much in the public interest. We were impressed with the depth of understanding that ORS has about the project. Their detailed understanding allowed ORS to negotiate a fair settlement with SCE&G that we think will make it more likely the project will be completed on schedule and without additional cost increases. We believe SCE&G has made the proposed contract a true “fixed price” agreement and has put the company’s guarantee solidly behind that contract.
The job done by ORS was an affirmation of the General Assembly’s passage of Act 175 in 2004, which created ORS and gave it the tools it needs to conduct an independent and professional examination of SCE&G’s proposal. ORS used those tools to negotiate a fair settlement that serves the general public’s and electric cooperative consumers’ interests.
Couick is president and CEO of The Electric Cooperatives of South Carolina, the state trade association of consumer-owned electric utilities.