Gov. Henry McMaster has called for legislative hearings into what may be the biggest theft in state history: a multi-billion-dollar nuclear disaster.
I witnessed the crime first-hand and know who pulled off the heist.
Those blaming SCE&G for shaking down consumers are chasing the wrong culprit. SCE&G is an investor-owned monopoly whose mission is to make money for its stockholders. It was no surprise, then, that it took advantage of an opportunity to socialize the risk and privatize the profit of building nuclear reactors. That’s what profit-driven corporations do.
South Carolina is one of two states, along with Georgia, that passed legislation to allow utilities to charge consumers for electricity they may never get, from nuclear reactors that may never be built. It also should be no surprise that these are the only two states where a new generation of nuclear reactors were, until Monday, being built.
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It wasn’t always like this.
It took five years of hearings before SCE&G was allowed to start billing consumers, in 1984, for construction of the V.C. Summer reactor in Jenkinsville, which already was making electricity. No more nuclear reactors would be licensed under the old rules, which made them too long, risky and expensive a venture.
Then three things happened. First, President George W. Bush championed the Energy Policy Act of 2005, which provided a generous package of subsidies to build new reactors, including loan guarantees, federal risk insurance and tax credits. Two years later, the Nuclear Regulatory Commission offered combined construction and operating licenses, which streamlined the licensing process for reactors. The NRC received 18 applications for the new one-stop license, but only two utilities stayed in the game: SCE&G and Georgia Power.
Why South Carolina and Georgia?
The third thing that happened was state law. In 2007, a bill was introduced in the S.C. Legislature to let SCE&G charge its customers in advance for future nuclear electricity. Georgia followed suit a few years later.
Building a nuclear power plant had previously been a financial burden on the stockholders who stood to benefit from the investment. But the “Base Load Review Act” — written by utility lawyers and lobbyists — ensured that SCE&G would get a set percentage of return based on its investment. SCE&G is currently guaranteed a healthy 10.5 percent on top of what it spends, so the more it spends, the more it makes. The sweetheart legislation also holds the power company harmless if it decides to “abandon the project after being granted a prudency determination” by the Public Service Commission — whose commissioners are appointed by the Legislature.
The bill, championed by Rep. Bill Sandifer and Sen. Tommy Moore, the Democratic candidate for governor, was sold as a consumer friendly law “to protect South Carolina ratepayers by enhancing the certainty of investments in the infrastructure of electric utilities.” Supporters promised it would save consumers from a big rate hike at the end of construction.
Electric utilities and the nuclear industry made 619 contributions totaling $514,956 to lawmakers in the legislative session leading up to the vote.
The Senate gave S.431 tentative approval without a single recorded vote on April 12, 2007, and agreed unanimously that same day to give it final reading the next day. Sen. Moore drove the bill in the Senate, and received $74,750 from electric companies that year. He also got the maximum $7,000 contribution from the law firm SCE&G hired to “secure” the law. The bill was introduced in the House on April 17, had second reading on April 18 and final reading on April 19 and became state law two weeks later without the governor’s signature.
Today SCE&G’s electricity bills are inflated by 18 percent to pay for the boondoggle.
Coinciding with the lobbying frenzy to promote the bill, electric utilities and the nuclear industry made 619 contributions totaling $514,956 to lawmakers in the legislative session leading up to the vote.
A decade later, the McNair law firm still boasts on its web site about delivering that vote for its corporate client: “Working on behalf of a Fortune 500 energy-based holding company that serves customers in South and North Carolina and Georgia, McNair helped secure utility legislation from the South Carolina legislature in 2007. Called the Base Load Review Act, this law is intended to allow a utility to recover prudently incurred capital and operating costs associated with new nuclear or coal-fired base load electric generating facilities larger than 350 megawatts.”
The McNair firm gave $64,000 to candidates who voted for the bill that SC&G paid it to work on. (Gov. McMaster, who was then attorney general, received the maximum contributions from both SCE&G and the McNair firm.)
The villain in this billion-dollar theft isn’t the for-profit corporation. It’s legislators who pass laws that restrict the regulators who could prevent the theft.
The Legislature needs to do no more than look in the mirror to see who’s guilty.
Mr. Bursey was the sole intervenor in the five years of federal licensing hearing for the original V.C. Summer reactor and is executive director of the S.C. Progressive Network; contact him at email@example.com.