Day 4 of the PSC Hearing (11-6-18)

Day 4 of the PSC Hearing (11-6-18)

In contrast to the first 3 days of these hearings in which only several witnesses testified, today 5 ORS witnesses were heard.

Here is a quick summary with some highlights.

A utility ratemaking consultant to ORS, Richard Bauding, testified as to why he was recommending that SCE&G should only be entitled to a 9.1% Return on Equity (ROE) on any of the abandoned nuclear construction costs it can recover from ratepayers. SCE&G’s current ROE is 10.25%.

ORS witness Norman Richardson, president of Anchor Power Solutions, presented the results of his analysis which showed that in March of 2015 SCE&G should have considered abandoning the nuclear project which was going to take at least two additional years to complete than what they were telling the public. Instead the utility might have built two gas plants at the same power generation size as the nuclear plants.
Kelvin Major, ORS Audit Manager, testified that SCE&G began making payments directly to Bechtel starting in August of 2015 and ended up totaling $1 million. The relevance of this information is that SCE&G has been saying that a law firm had hired Bechtel to do an independent analysis of the nuclear project for purposes of a prospective lawsuit. Thus, according to SCE&G the Bechtel Report belonged to this law firm and therefore the utility did not have to disclose Bechtel as a consultant when officially requested by ORS.

ORS witness Daniel Sullivan, Department Director of the ORS Audit Department, testified that SCE&G’s non-new nuclear development had increased by over $1.2 billion since its last base rate case in 2012.The last ORS witness to testify was Lane Kollen, a utility rate and planning consultant. He reviewed SCE&G’s proposals for abandoned construction cost recovery compared to the ORS proposal. The impact on consumers would be significant with the ORS proposal requiring ratepayers far less of the abandonment costs than the SCE&G/Dominion proposals.

Mr. Kollen also discussed securitization of allowable abandonment cost recovery would result in the most savings for ratepayers. Securitization is not currently legal in South Carolina.

When asked, Mr. Kollen acknowleged that the current SCE&G electric rates, that are 15% below pre-abandonment rates, has not resulted in SCE&G filing for bankruptcy.

Mr. Kollen also expressed concern that if Dominion acquires SCE&G that the utility might purchasing natural gas from the Atlantic Coast Gas Pipeline that Dominion is building. This self-dealing would eventually harm SCE&G ratepayers by eliminating competition in the natural gas industry and thus eventually increase consumer rates.

Day 5 starts on Wednesday.

Frank Knapp