Controversial Base Load Review Act allows regulated utilities to recover finance costs up front
BY RODDIE BURRIS firstname.lastname@example.org
South Carolina Electric and Gas Co. was given the go-ahead Wednesday to raise residential electric rates by nearly 2.6 percent to help finance the cost of two nuclear reactors under construction at the V.C. Summer plant in Fairfield County.
The new rates, approved unanimously, would increase the monthly bill of an SCE&G customer who uses 1,000 kilowatt hours of electricity by roughly $4, to $149. The rate hike will generate about $69 million in revenue for the power company. Electric rates for SCE&G commercial customers would also rise by up to 3 percent, depending on the size of the business operation.
The S.C. Public Service Commission approved the rate increase without debate during its monthly meeting, although the annual rate hikes have drawn fierce criticism from ratepayers, conservationists and organizations such as the S.C. Small Business Chamber of Commerce and AARP of South Carolina.
SCE&G, a wholly-owned subsidiary of SCANA Corp., in May requested a 2.78 percent electric rate increase under the state’s Base Load Review Act, which the General Assembly put in place in 2006. The law allows utility companies to adjust rates to recover the costs of building nuclear plants while the plants are under construction, rather than waiting until they become operational.
Critics, some of whom oppose nuclear power, condemn the measure for putting SCE&G ratepayers on the hook for money before construction is complete and the reactors have become operational. Critics note there is no guarantee the reactors will be completed or current ratepayers will benefit.
Construction of the first of two reactors initially was to be completed by 2016, and both were to cost a total of $9.8 billion. However, this month the Public Service Commission approved SCE&G’s request to expand the project’s cost by $1.1 billion, raising the new total cost of the project to $11 billion.
The PSC also approved a three-year delay in the scheduled completion dates for the reactors, meaning the Unit 2 reactor would not go online until 2019, with the Unit 3 reactor scheduled a yearto-18 months later.“By 2020, when the first of the new units might be operable, the advance-payment portion of the SCE&G bill – just to pay for financing costs – could reach a shocking 25 percent,” said Tom Clements, director of SRS Watch, a watchdog outfit on issues at the federal weapons plant near Aiken.
The latest rate hike is the eighth approved by the PSC for SCE&G customers since the Base Load Review Act went into effect in 2009. With the latest increase, about 15.5 percent of SCE&G residential customers’ monthly bills will go toward construction of the new reactors, according to the Office of Regulatory Staff.
SCE&G owns 55 percent of the reactor construction project at V.C. Summer and Santee Cooper, the state-owned utility, owns 45 percent.
SCE&G ratepayers are shouldering a 35 percent increase in their monthly bills since January 2008, with half of those hikes being the result of the Base Load Review Act, said Frank Knapp, S.C. Small Business Chamber of Commerce president and CEO.
“There’s got to be some amendment in that law to protect the consumer,” Knapp said, so there are ramifications when a company promises to deliver a project at a specific cost and date, then fails to comply