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Lexington County Chronicle
March 5, 2020
By Frank Knapp Jr., Special to the Chronicle
As the legislature debates Santee Cooper’s future, criticism has been levied against NextEra Energy’s offer to buy the state utility.
Selling Santee Cooper to NextEra would relieve ratepayers of a crushing $6.8 billion nuclear and other debt, give back ratepayers money already paid for the nuclear project debacle and lower rates.
Some accused NextEra’s bid of problems of the Base Load Review Act (BLRA), the 2007 law that enabled SCE&G and Santee Cooper to run up billions in cost overruns and delays in the failed nuclear effort.
The South Carolina Small Business Chamber of Commerce has experience with the BLRA.
In 2015, we first raised our concerns about the BLRA.
In 2016, we co-founded the Stop The Blank Check Coalition to propose amendments to the BLRA so there would never be a repeat of the SCE&G disaster.
Then the nuclear project was abandoned in July 2017 and the legislature essentially ended the BLRA for the future. Now the ghosts of the old BLRA are being resurrected to tarnish NextEra’s purchase proposal.
Here are the charges and the facts.
The BLRA did not protect consumers from paying for SCE&G cost overruns in billions before the project was abandoned.
Under NextEra’s proposal the utility will recover no construction costs that exceed those initially approved by the legislature.
The BLRA allowed SCE&G to increase rates annually for 9 years for the project while the nuclear plant was being built.
Under NextEra’s proposal, consumers will not pay until projects are up and running.
The BLRA gave SCE&G the legal right to recover all its costs for the nuclear project – including almost another 10% for SCE&G profits – even if the project was abandoned.
Fortunately, SCE&G was sold to Dominion Energy and ratepayers relieved of much of its $5 billion nuclear debt.
Under NextEra’s proposal, the utility will not be able to recover construction costs for an abandoned project unless the reason is due to changes in federal laws or regulations that would legally halt the project.
Critics have raised other BLRA-related concerns it should address.
One of the amendments proposed by our Coalition was to have the SC Office of Regulatory Staff (ORS), which represents the public’s interest, serve as advisors to all utility negotiations and decisions under the BLRA.
NextEra’s project costs to be recovered from ratepayers are capped, but this amendment will give the public more assurance that construction costs are appropriate.
Finally, lawmakers should consult with the Public Service Commission and ORS before approving the Return on Equity rate – in other words, profit – NextEra requested.
Simply put, the NextEra proposal is not the BLRA reincarnated.
Mr. Knapp is the president/CEO of the South Carolina Small Business Chamber of Commerce.