SCE&G assailed for nuclear deal where utility profits, customers lose

Attorneys seeking customer refunds from SCE&G for its failed multibillion-dollar nuclear power plant accused the utility Monday of breaking its promises to its ratepayers.

The utility promised that if its customers paid higher rates while two nuclear reactors were being built in Fairfield County, they would get lower rates later, they said.

“If you pay for a benefit in advance, you should receive that benefit,” attorney Gibson Solomon told S.C. Judge John Hayes III in a daylong hearing at the Richland County courthouse.

But SCE&G customers wound up with nothing when the SCANA subsidiary and its junior partner, the state-owned Santee Cooper utility, abandoned the project. Now, Solomon told Hayes, those customers should get compensation for years of higher electric rates.

“We are saying, ‘Give us the benefit or pay us damages,’ ” Solomon said, calling SCE&G’s 700,000-plus ratepayers’ the “forced financiers” of a project that was “negligently made and voluntarily abandoned.”

Solomon is one of the lead lawyers in a class-action lawsuit brought by LeBrian Cleckley, a ratepayer. Lawyers for four similar lawsuits also attended.

No date has been set for the suit to go to trial. The main issue at Monday’s hearing was whether the suit even should be heard in a S.C. court. The S.C. Public Service Commission, a regulatory agency, usually oversees utility rate cases.

SCE&G attorney James Becker told Hayes he should dismiss Cleckley’s lawsuit.

“Let this play out in front of the Public Service Commission!” urged Becker. “Let it play out in front of the (S.C.) Supreme Court!”

Becker cited numerous Supreme Court decisions, legal principles and doctrines, statutes and even court rules — every one of which, he argued, bans ratepayers from using S.C. courts to pursue rate grievances.

“This court cannot hear those claims,” said Becker, a specialist in class-action, business litigation. He added rate issues are complex and state judges “lack the expertise” to handle them.

But the attorneys for other plaintiffs told Hayes that Becker’s arguments defied reason.

Attorney Daniel Haltiwanger argued SCE&G’s behavior — taking ratepayers’ money and failing to build a nuclear plant that saved customers’ money — amounted to an unlawful “taking,” or seizure, of the ratepayers’ property.

Solomon told Hayes that state courts have “the widest possible jurisdiction,” arguing the claims for damages by SCE&G ratepayers could not be brought before the Public Service Commission.

Bob Cook, the top attorney for the S.C. Attorney General’s office, told Hayes a 2007 law, which allowed SCE&G to begin charging ratepayers for the nuclear plant before it started producing power, was “constitutionally suspect,” lawyer’s shorthand for probably unlawful.

The Base Load Review Act “was not enacted in the public interest,” said Cook. “I believe it was enacted in the utility’s interest.”

The 2007 law allowed SCE&G’s to bill ratepayers while building the nuclear reactors. Now abandoned, they never will produce power – a failure that left ratepayers “out in the cold” and paying for “a hole in the ground,” Cook said. “It takes their property without just compensation.”

Some 35 lawyers were in the court’s audience for most of Monday. They included I.S. Leevy-Johnson, who also represents SCANA, and Nelson Mullins lawyer Dwight Drake, who represents Santee Cooper. Plaintiffs’ attorneys included Ed Bell, former U.S. Attorney Pete Strom, Terry Richardson and Bakari Sellers. Also on hand was a team of attorneys from the S.C. Attorney General’s Office, led by Solicitor General Cook.

Under the Base Load Review Act, SCANA levied nine rate hikes to help pay for the nuclear project. Those raised almost $2 billion.

SCE&G also currently is charging its customers $37 million a month — or $27 per customer, on average — to pay for the nuclear project, although construction has stopped.

“We have given them all this money,” Haltiwanger said, “and they have given us nothing in return.”

Judge Hayes made no decision on the case Monday.

Attorneys said it may take him a month or more to rule.

Among the issues he may decide: whether the Base Load Review Act is unconstitutional; whether state courts have jurisdiction over Cleckley’s claims; and whether his suit should be transferred to the Public Service Commission.

This story was originally published January 8, 2018 at 3:37 PM with the headline "SCE&G assailed for nuclear deal where utility profits, customers lose."