South Carolina Small Business Chamber of Commerce president and CEO Frank Knapp made the below comments tonight to the Lexington County Legislative Delegation at their meeting held at the Airport Campus of Midlands Technical College in West Columbia.
I’m Frank Knapp, president and CEO of the South Carolina Small Business Chamber of Commerce. Thank you for allowing me to say a few words about an issue that I hope you will address in the coming legislative session.
Since 2008, SCE&G rates have increased by about 31%. More than half of that has been due to the Base Load Review Act passed in 2007 which allows the company to have annual rate hikes to pay for the financing of construction costs of the two nuclear plants in Fairfield County.
I am not here to second guess the decision to pass the Base Load Review Act for its intended purpose.
Nor are we advocating that the nuclear plants not be built.
However, those plants are already hundreds of millions of dollars over budget and are 3 years behind schedule. All the while the annual rate increases continue and the cost of the plants keeps going up—all of which, under current practice, is and will be paid for by the consumers. And by the time the nuclear plants are finished, rates will have risen 31% just for construction financing. Add to that the regular rate hikes and consumers may be paying SCE&G bills 50% higher by 2020 than they were just 12 years earlier.
So we believe it is time to reassess the Act and how it has been carried out to determine if it really is serving the public’s interest and not just the interests of SCE&G and their stockholders.
We are calling for an independent analysis of the Act to provide both the Public Service Commission and the General Assembly with information needed for going forward.
This assessment should address the following:
- How much of the originally projected $4 billion in ratepayer savings over the 40-year life of the nuclear plants has been eroded today due to construction delays and overruns?
- At what point would it be in today’s customers’ interest to cease the funding of on-going construction financing costs and approval of cost overruns and instead require SCE&G to complete the construction on its own dime and then ask the Public Service Commission for the appropriate rate increase?
Now the Public Service Commission has the authority to reject SCE&G requests for additional cost overruns under the Act which specifically calls for “protecting customers of investor-owned electrical utilities from responsibility for imprudent financial obligations or costs.”
However no cost overruns, no costs due to delay, no additional costs due to inadequate contract penalties have been ruled as “imprudent financial obligations or costs” by the Public Service Commission. Thus all these costs plus a hefty profit on top are being passed on to the ratepayer instead of the SCE&G shareholder who can demand accountability. The General Assembly should define the terms “prudent” and “imprudent” in the Act to better benefit the consumer.
Finally, the Small Business Chamber asks the General Assembly to provide some financial relief to SCE&G customers both because of the burden placed on consumers due to the Act passed by the Legislature and also because the new nuclear plants will benefit the entire state.
The projection is that these nuclear plants will cover 80% of the reduced carbon emissions goal set by the Environmental Protection Agency. The cost of achieving this goal should be a statewide responsibility—not paid for solely by my 91-year old mother, the people in this room, the small business SCE&G customers and all the rest of the company’s ratepayers.
We are looking to members of the General Assembly to take action. The independent assessment of the Act and how it has been carried out will not happen without you. And certainly the needed financial relief for SCE&G customers is your responsibility.
We are ready to work with the General Assembly on these issues.