SCE&G suffers loss as SC judge allows ratepayers’ $2 billion lawsuit to go on

A South Carolina judge has refused to dismiss five lawsuits alleging wrongful acts by SCE&G cost its ratepayers almost $2 billion in connection with the V.C. Summer debacle.

“SCE&G’s motion to dismiss is denied,” Circuit Court Judge John Hayes III said in a 13-page order made public Friday.

The ratepayers’ class-action lawsuits were filed last year in the wake of the Cayce-based utility’s July 31 decision to abandon a multibillion-dollar nuclear project in Fairfield County. A state law allowed SCE&G to increase its ratepayers’ electric bills nine times to pay for two now-unfinished nuclear reactors.

“We are obviously pleased with the judge’s ruling,” said Columbia attorney Pete Strom, the court-appointed lead lawyer in the consolidated lawsuits against SCE&G. “We are continuing to investigate this matter.”

At a Jan. 8 hearing, Columbia attorney James Becker, representing SCE&G, told Hayes the lawsuits shouldn’t be heard in court. Instead, Becker said the proper place to see if the ratepayers should get money back is before the S.C. Public Service Commission, which oversees utility rates.

In his ruling, Hayes disagreed, saying the lawsuits raise issues that cannot be decided by the PSC and the relief sought – the return of roughly $2 billion in allegedly misspent money – “is not available through the PSC.”

Although a setback for SCE&G, Hayes’ ruling comes at an early stage of what is likely to be a long legal battle.

“We understand our electric customers in South Carolina want relief,” SCE&G responded in a statement. “We want to provide it to them, which is why we are seeking a combination with Dominion Energy. The Public Service Commission is the best forum for the issues related to rates and customer refunds to be decided.”

According to the lawsuits, the questions raised by SCE&G’s abandonment of the nuclear project include whether the utility mismanaged construction, whether it “breached its duty” to properly manage the money it received for the project and whether the utility was “unjustly enriched” by the collection of nuclear-related surcharges.

State ‘pleased’ by ruling

The state of South Carolina also is a defendant in the lawsuits.

That is because, in 2007, the General Assembly passed a law – the Base Load Review Act – to allow SCE&G to charge its customers for part of the construction costs of the nuclear project. Since 2007, those charges have totaled almost $2 billion. Currently, the nuclear-related charges cost an SCE&G residential customer, who uses 1,000 kilowatt hours of power, $27.03 a month and bring in about $37 million a month to SC&EG.

“Even though the state is a defendant in this case, we are pleased that Judge Hayes’ ruling allows the case to move forward,” S.C. Attorney General Wilson said in a statement Friday.

“We firmly believe the ratepayers should have their day in court,” said Wilson, whose office is arguing the Base Load Review Act is unconstitutional. “The judge’s ruling is a victory for ratepayers.”

While SCE&G and its junior partner in the nuclear project, the state-owned Santee Cooper utility, abandoned it on July 31, SCE&G has said it will continue to bill its customers for the project’s cost.

Hayes did not rule on motions by the suing ratepayers asking him to set aside ratepayers’ monthly payments and give them to a custodian, called a “receiver.” A receiver would hold the money in trust until the issues in the lawsuits are decided.

Some 20 lawsuits have been filed against SCE&G in state and federal courts over the nuclear debacle.

“More than 50 lawyers, some of whom do not live in South Carolina, have flooded the courts with more than 20 duplicative lawsuits — and they all seek substantial attorneys’ fees awards that would not be shared with customers,” SCE&G said in its statement Friday. “We will continue to defend the company from these lawsuits, in the best interest of our customers, shareholders, and employees.”

A federal grand jury, working in secret in Columbia, also is investigating possible criminal charges in the $9 billion-plus fiasco.

This story was originally published March 2, 2018 at 2:29 PM with the headline "SCE&G suffers loss as SC judge allows ratepayers’ $2 billion lawsuit to go on."