On day 13 of the PSC hearing, SCE&G put up as a witness Dr. Glenn Hubbard, an economics professor at Columbia University in New York. Dr. Hubbard testified about the serious financial dangers SCE&G would face if the PSC went with any of the proposals for rate rollbacks offered by ORS.
SCE&G’s attorney introduced Dr. Hubbard and asked him about the compensation he is receiving for providing expert witness testimony in the hearing. Dr. Hubbard said that he rate is $1500 an hour and that he will have spent about 60 hours on his testimony and presentation.
Mr. Knapp began his questioning of Dr. Hubbard by congratulating him on his healthy fee for expert testimony. In response to Mr. Knapp’s question Dr. Hubbard said that he agreed that the value and importance of a witness’s testimony was not a function of how much they were being paid.
Mr. Knapp asked about Dr. Hubbard’s direct testimony which said that the PSC ordering the experimental rates (a 15% rollback) would result in SCE&G suffering “hundreds of millions of dollars in additional lost revenue, which would have a lager negative impact on SCE&G’s financial condition, credit rating, and cost of capital.” When asked to elaborate, Dr. Hubbard said that he was just giving his opinion as to the financial risks of making the experimental rates permanent.
Mr. Knapp asked that if SCE&G willingly accepted the experimental rates as permanent wouldn’t that be committing financial suicide? Dr. Hubbard that it would not be financial suicide. It would just be increasing financial risks, but it would be a business decision. It would not necessarily result in bankruptcy.
In a follow up question, Mr. Knapp asked that if Dominion agreed with his assessment of the impact of the experimental rates being made permanent, then shouldn’t Dominion walk away from the merger? Dr. Hubbard then said that it would still come down to a business decision for Dominion of whether the merger was still attractive.
Mr. Knapp continued questioning on this issue. If Dominion, he asked, still wanted the merger even with the experimental rates being made permanent, then Dominion must not agree with his dire financial consequences of the experimental rate being made permanent, or even a greater rollback of 18% or 19%, correct? Again Dr. Hubbard said it all came down to a business decision by Dominion on whether to pursue the merger regardless of what the rate rollback is even if it is 18% or 19%.
Another SCE&G witness was Dr. Kenneth Petrunik, a nuclear power industry consultant from Canada.
Dr. Petrunik told of his experience in living in multiple countries on the development of nuclear power plants. He emphasized how China was able to build the AP1000 (the nuclear reactor design that SCE&G was building) and that the reactors could have been completed in South Carolina.
However, under questioning by the Sierra Club/Friends of the Earth attorney, Dr. Petrunick acknowledged that the Chinese government subsidized the construction of the AP1000s and that Canada had numerous nuclear plants but has never built an AP1000.
Day 14 starts Tuesday.
Frank Knapp