Opinion: Nuclear plant crisis calls for utility reform

Upstate Business Journal
September 28, 2017

by Frank Knapp Jr. Guest Contributor

The nuclear plant construction project in Fairfield County is now abandoned. Who will be responsible for paying the $9 billion in construction bonds for the defunct project owned by SCE&G and Santee Cooper?

SCE&G wants its customers to pay. Santee Cooper, a state agency, will be looking at its customers (which includes the state’s co-ops) or a state taxpayer bailout.

This monumental failure didn’t just happen; it’s been building for some time. In July 2016, the South Carolina Small Business Chamber of Commerce co-founded a coalition, Stop the Blank Check, to demand changes to a law that we believed was encouraging the nuclear project to go way over budget and schedule.

The Coalition members are AARP-South Carolina (Partner), Carolina Peace Resource Center, Kingdom Living Temple, National Association of Social Workers ­– S.C. Chapter, New Alpha Community Development Corporation, League of Women Voters of South Carolina, S.C. Small Business Chamber of Commerce, Sustainable Midlands, and the Whitney M. Slater Foundation.

The Base Load Review Act (BLRA) all but required state utility regulators to approve every construction budget increase and allowed automatic annual rate increases, which included profit of over 10 percent, to pay for just the construction financing costs.

But with SCE&G, Santee Cooper, and even Duke Energy now no longer wanting to build a nuclear plant, the state legislature should easily decide to terminate the BLRA. That’s what the coalition is now recommending.

However, this crisis has exposed regulatory reforms needed for some time. The reforms being proposed by the coalition address both the undue influence that utility companies have on our elected officials and regulators, and they focus more attention on protecting the consumer. Had these below reforms been in place before 2007, the BLRA might not have been the flawed legislation that it is, and it may not even have become law.

No person should serve on any body associated with either shaping or carrying out the regulatory process if they, their family, or a business with which they are associated has a business relationship with or receives any form of income or compensation from a state-regulated utility, an affiliate of such a utility, or an association representing such utilities.

Public service commissioners should be appointed by the governor or elected by the public but only if public financing were provided, with a prohibition on any private funding from any source.

A consumer advocate position should be created within the Office of Regulatory Staff (ORS) to represent the interests of utility ratepayers.

The ORS should not be responsible for representing the financial “integrity” of utilities as an explicit element in its mission as it is currently. The ORS mission should only be to represent the interests of ratepayers and the general public interest.

The Public Utility Review Committee (PURC), composed of a handful of legislators and private citizens to oversee ORS, has inadequate protection against conflicts of interest and represents a blurring of lines between legislative and executive functions. PURC should be disbanded and its functions given to the governor and appropriate House and Senate legislative committees.

Regulated utilities should be prohibited from making campaign contributions to individual political candidates, parties, political action committees, or caucuses.

Santee Cooper’s public status shields it from the needed regulatory oversight given to private utilities, and it also lacks proper oversight by elected leaders. The state agency must be made more accountable. The governor should be able to remove Santee Cooper directors at will, and the agency should be under the same regulative oversight, laws, and rules as privately owned utilities.

The state should take control of the direction of its energy future by developing an energy plan for South Carolina that reflects the state’s diversity of energy sources and flexibility to move forward toward an affordable sustainable future.

Finally, every effort should be taken by state agencies, organizations, individuals, and private attorneys to hold SCE&G and SCANA shareholders responsible for the incurred construction costs of the abandoned nuclear plants.

These are the recommendations of our coalition to restructure our utility regulatory system to create a consumer-friendly regulatory process and prevent this kind of crisis from ever happening again.

Frank Knapp Jr., president and CEO, S.C. Small Business Chamber of Commerce.

Opinion: Nuclear plant crisis calls for utility reform


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