The S.C. House next week will discuss blocking SCE&G from charging its customers any more for the utility’s failed V.C. Summer nuclear project.
However, that initial House proposal – up for debate at hearings Monday and Tuesday – would not force the utility to repay its customers the $1.7 billion they already have been charged for the project, sources familiar with the situation said.
The House’s plans came to light Thursday as SCANA, the Cayce-based parent company of SCE&G, reported its third-quarter profits plummeted by more than $150 million to $34 million because of the V.C. Summer debacle.
The proposal is the Legislature’s first swing at settling whether and how to help SCE&G’s 700,000 customers who have been hit with nine increases for the now-abandoned project.
SCE&G’s residential customers, in the Columbia and Charleston areas, now pay about 18 percent of their monthly bills – or roughly $27 a month – for the bungled atomic reactor construction project, abandoned July 31.
Meanwhile, with his company’s earnings down sharply, Chief Executive Kevin Marsh said Thursday that SCANA is working on a “comprehensive settlement that would be in everybody’s best interest and mitigate costs to customers going forward.”
Marsh did not say who he is negotiating with. But, in a conference call, he told securities analysts that he hopes a deal can be reached before the Legislature returns to Columbia in January.
“We have had some preliminary conceptual discussions with some of the parties,” Marsh said. “Out of respect for the process or the parties, I don’t want to get into the details at this point because we don’t have anything definitive.”
S.C. House members, furious over the V.C. Summer debacle, said last month they had stopped all communication with SCANA. Thursday, they said they have not negotiated next week’s proposal with the utility.
Instead, House Speaker Jay Lucas’ office said it has hired an attorney to represent the House in a case pending before the S.C. Public Service Commission. That case could halt SCE&G’s current charges to its customers for the nuclear project and, eventually, allow them to be repaid some of the money they already have paid.
SCANA announced July 31 that it would walk away from an over-budget and behind-schedule project to add two nuclear reactors at its V.C. Summer Nuclear Station. However, it has not formally filed papers with the PSC to abandon the project.
The abandonment request potentially would allow the utility to charge its customers at least $2 billion more for the project, but a settlement might reduce that amount.
The House’s tentative proposal would block SCE&G from continuing to collect the $27 a month the average customer now is paying for the project, sources told The State newspaper. But the initial proposal is not expected to repay power customers for the $1.7 billion they already have been charged for the project.
Further details on the plan were limited Thursday. Sources said the final proposal likely would be shaped by debate next week.
The idea of legislators settling with SCE&G didn’t go over well Thursday with a lawyer who represents large industrial energy customers.
Scott Elliott, legal counsel for the Energy Users Committee, said power customers are in a strong position to recover some of the money they already have paid. It is too early to discuss settling the matter, he said.
“Ratepayers have a strong hand in this proceeding,” he said. “What incentive is there for the ratepayer to settle?”
The proposal blocking further SCE&G nuclear charges is one of several to be discussed in House hearings Monday and Tuesday.
House members also are expected to discuss changing or repealing the Base Load Review Act. That 2007 law enabled the doomed nuclear project and saddled SCE&G’s power customers with its costs before it was completed.
“The committee’s primary goal is to develop a plan that protects ratepayers, holds those accountable for mismanaging consumer interests, and prevents this fiasco from occurring again,” Lucas wrote The State in a statement. “The House has taken a lead on this issue, and I believe that our efforts will be successful as the legislative process continues to play out in a transparent and public manner.”
$210 million charge against earnings
Thursday’s talk of settlement negotiations came as SCANA revealed huge hits to its profits because of the V.C. Summer fiasco.
The utility reported earnings of $34 million for the third quarter, or 24 cents a share. That compared with profits of $189 million, or $1.32 a share, for the same period in 2016.
The utility blamed its lower profits on a $210 million charge associated with the nuclear project. “These decreases are primarily attributable to an impairment loss of $210 million ($132 million, net of taxes) ... associated with the abandoned new nuclear project,” the utility said Thursday.
During a conference call with securities analysts, SCANA’s top officials indicated it is unlikely they would try to revive the nuclear project – as some lawmakers want the utility to do. SCANA would not be able to get a $2 billion tax deduction to offset its costs if it planned to finish the project, CEO Marsh said.
“We don’t have to make those decisions by today, but we would by the end of the year,” Marsh said, adding, “Our priority is preserve the ability to take the abandonment deduction. That’s worth $2 billion to our customers.”
The company plans to use the tax break, along with a $700 million settlement paid by the parent company of V.C. Summer’s former chief contractor, Westinghouse, to defray its costs.
The shut down of the V.C. Summer project – after nine years of work and $9 billion spent – has sparked state and federal investigations, and a barrage of criticism from lawmakers and ratepayers.
In its third-quarter earnings release, SCANA said it took the $210 million charge for the failed nuclear project because it “had determined that a disallowance of part of the cost of the abandoned part is ... probable.”
On Thursday, SCANA’s stock price dropped after the earnings report. However, after its analyst call, the stock recovered, adding 25 cents a share to close at $47.83. While up for the day, that is far below the stock’s 52-week high of $74.99 a share, set before the V.C. Summer debacle.