State lawmakers said Tuesday they will push to scrap the 2007 law that saddled S.C. electric customers with at least $1.4 billion in costs for two now-abandoned nuclear reactors in Fairfield County.
Meanwhile, S.C. Gov. Henry McMaster is asking the General Assembly to hold hearings into how the V.C. Summer expansion fell through, and what can be done to ensure the multibillion-dollar flop never happens again.
A day after the state-owned Santee Cooper utility and Cayce-based SCE&G halted construction of two additional nuclear reactors in Jenkinsville, lawmakers say state regulators must better protect S.C. ratepayers.
“It’s going to be an enormous issue going forward,” said state Rep. Kirkman Finlay, R-Richland.
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“We’ve lost $7 (billion) to $9 billion of ratepayer money,” said Finlay, referring to the $9 billion that the two utilities already have paid for the project and now may seek to recoup from ratepayers. “The last week has demonstrated the regulatory structure that we have and the Base Load Review Act itself need a massive overhaul.”
The Base Load Review Act, passed overwhelmingly by state lawmakers 10 years ago, enabled utilities to charge their customers higher rates to pay for the reactors during their construction. The utilities promised paying upfront would save money in the long run by lowering their borrowing costs.
To date, SCE&G has hit customers with more than $1 billion in rate increases to bankroll the now-canceled project, plagued by cost overruns and construction delays.
“My ratepayers are paying 18 percent more for something they will never get,” Finlay said.
Earlier this year, Finlay filed a bill that would prevent utilities from using the Base Load Review Act to finance future projects. He expects more support for his bill when the Legislature reconvenes in January.
Finlay and others said legislators should not stop with scrapping the 2007 law.
“We need top-to-bottom reform,” S.C. Sierra Club lawyer Bob Guild said Tuesday. “Don’t waste your time reforming the Base Load Review Act. No one in their right mind is going to build a new nuclear plant in the next 100 years.”
The 2007 law had few defenders Tuesday.
“It looks like a very poor decision on our part,” said state Sen. Greg Gregory, R-Lancaster, who joined 24 of the Senate’s 46 members in sponsoring the proposal at the time. “It was the initial catalyst for this debacle. We’ve got to figure out where we go from here and who is going to bear the burden.”
State Rep. James Smith, D-Richland, hopes a bipartisan “Energy Caucus” of lawmakers will propose a statewide energy plan and regulatory changes to better protect ratepayers.
Those changes likely would be aimed at the S.C. Public Service Commission, the board that regulates utilities.
After legislators approved the 2007 law, the PSC, whose members are appointed by the Legislature, approved nine separate SCE&G rate hikes to pay for the reactors.
“If you follow PSC decisions, there was rarely a contested outcome,” Smith said. “It was largely a foregone conclusion what the result would be, and it was based on a system that inadequately vets these proposals.”
Smith suggested lawmakers examine whether the commission’s members should be elected by the public, instead of appointed by legislators.
“We need a process that is more responsive and accountable to ratepayers,” he said. “There is a lot of separation right now between those that pay the bills and those that are making the decisions about whether or not to increase the rates.”
Some lawmakers suggested legislation to ensure ratepayers don’t bear the full costs of abandoning the nuclear reactors. Others should pay some of the costs, they said, including stockholders in SCE&G’s parent company, SCANA, which is publicly owned by its shareholders.
Shutting down the project could cost SCE&G $4.9 billion, officials said Tuesday.
“The idea that the ratepayers are going to pay and pay and pay — and SCE&G and others aren’t — is probably unsustainable in the long term,” Finlay said.
Gov. McMaster wants lawmakers to investigate the project’s failure, a spokesman said Tuesday. The governor’s position on what should be done will be based on legislators’ findings, his office said.
5,000: Workers at the Jenkinsville construction site who have lost or will lose their jobs
9: Rate hikes, thus far, that SCE&G has passed on to its customers to pay for the now-abandoned reactors
$1.4 billion: Higher rates that SCE&G customers have paid as a result
$11 billion: Original projected cost of the two reactors; that estimate was revised upward to at least $20 billion due to delays and cost overruns before the project was abandoned
$4.9 billion: SCE&G’s estimate of the cost now to shut down the project