The state Public Service Commission agreed Thursday to move ahead with a proposal to block SCE&G from charging its customers more money for two nuclear reactors the utility abandoned after spending $9 billion.
But the proposal by the state Office of Regulatory Staff is far from resolved – and it faces a major hurdle: SCE&G, and its corporate parent, Cayce-based SCANA.
The embattled utility will fight efforts to remove charges from customers’ bills, it said in a motion filed Thursday. That motion asked for the dismissal of the Regulatory Staff’s rate-cutting request, saying it was “illegal and unconstitutional’’ and outside the power of the PSC.
SCE&G said cutting customers’ charges for the two unfinished reactors could damage it financially, reducing its earnings by $3.8 billion. The Regulatory Staff proposal caused SCANA’s stock price to drop by about 8 percent at one point this week, SCANA chief financial officer Jimmy Addison said in an affidavit to the commission.
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Granting “the relief sought in the request would have an immediate and highly negative effect on the company’s perceived risk in the financial markets,’’ Addison’s statement said. The Regulatory Staff request could mean “potentially ruining the financial posture of the company,’’ the utility said.
Up for discussion Thursday was a request that would wipe out an average $27-a-month charge that residential homeowners are paying for the failed nuclear project.
Dropping that charge would cost SCE&G $37 million a month, or about $445 million a year, according to the Office of Regulatory Staff and the utility.
The Regulatory Staff proposal also eventually could lead to SCE&G customers being paid back all or part of the $1.7 billion they already have paid into the project.
At Thursday’s special meeting in Columbia, the utility oversight board didn’t rule on the proposal, but it agreed to schedule a hearing on its merits at a later date.
That hearing – where Regulatory Staff and SCE&G will argue the case – could come within a month, according to the PSC.
Can SCANA survive?
The PSC meeting was held as questions swirl about SCANA’s future in the wake of the nuclear project fiasco.
The company, the only large investor-owned utility headquartered in South Carolina, is under attack on multiple fronts, including a flurry of lawsuits, and federal and state criminal investigations. Some question whether it will survive the onslaught or file for bankruptcy, particularly in light of the rate-cutting proposal by the Office of Regulatory Staff.
Thursday’s hearing follows a summer of scorching criticism by ratepayers and politicians of SCE&G and the state-owned Santee Cooper utility, SCE&G’s junior partner in the reactor project. Many are incensed the two utilities worked on the project for nearly a decade, only to announce July 31 that they would halt construction.
The decision left more than 5,000 workers jobless and ratepayers upset that they had been billed more than $2 billion to finance a project that would not be completed. The charges to customers are still on their bills, and SCE&G has indicated it might seek $2 billion more from customers to pay itself back for other costs associated with the project.
SCE&G and Santee Cooper have said they wanted to complete the project but it had become too expensive in the wake of a rash of troubles, including the bankruptcy of project contractor Westinghouse. Before shutting the project down, estimates showed the reactors would cost more than $20 billion to complete – about double the original expected cost.
‘Starting to pay attention’
Scott Elliott, an attorney who represents large industrial energy users, said his clients are watching the case closely because a rate cut could mean big savings. He said industrial users collectively stand to save “hundreds of millions of dollars’’ a year.
The ORS request to halt further charges to customers followed an opinion by state Attorney General Alan Wilson that cast doubt on a law the Legislature passed allowing construction of the reactors to start in 2008. The 2007 Base Load Review Act made it easier for SCE&G to charge customers up front for the costs of the project.
Wilson’s opinion, released Tuesday, said portions of the 2007 law – that allowed SCE&G to charge its customers for the project – were “constitutionally suspect.’’
This week’s petition by Regulatory Staff is similar to a request filed three months ago by environmentalists seeking to get money back for customers or, at least, halt future payments.
On June 22, Friends of the Earth and the S.C. Sierra Club requested the state Public Service Commission hold a hearing on the wisdom of continuing the project. The groups now are seeking documents from SCE&G to bolster their case.
Friends of the Earth adviser Tom Clements said he is glad Regulatory Staff made its request on behalf of ratepayers, adding it could bolster his group’s efforts. “They are starting to pay attention. But they only acted after the attorney general issued his opinion,’’ Clements said. “They could have done this a lot earlier.’’
Sierra Club lawyer Bob Guild said he hopes the PSC will grant the Regulatory Staff request to suspend charges for the nuclear plant. But he remains wary. The PSC OK’d nine rate increases to finance the reactors and a number of budget increases as costs mounted.
“Procedurally, it was the right decision today,” Guild said. “But it doesn’t imply that the commission is committed to doing the right thing on the merits at all.’’