SCE&G delayed budget request for bungled nuke project until after longtime utility regulator re-elected

As utility executives from SCE&G prepared to seek an $850 million budget increase for a troubled nuclear project in May 2016, they saw a potential obstacle: The upcoming Public Service Commission election.

Incumbent commissioner Butch Howard, a nuclear energy supporter and panel member since 2004, was in trouble.

Carolee Williams, a Virginia-educated planner from Charleston, was running for Howard’s seat on the PSC and utility officials said she was a formidable opponent for Howard.

Ultimately, SCE&G chose not to ask the PSC to approve the budget increase until after Howard won his re-election bid, records show. A May 3, 2016 email, obtained by The State newspaper, says top SCE&G officials had been “waffling’’ on when to seek the budget increase from the Public Service Commission as PSC member Howard’s race for re-election loomed.

It was unclear this week why SCE&G didn’t seek approval for the budget increase until after the election or what potential advantage a delay would provide.

But some critics of SCE&G’s nuclear project speculated that SCE&G didn’t want its budget request to be scrutinized by legislators as they tried to pick between Howard and Williams. Critics said SCE&G might have waited to file its petition for the $850 million budget increase because it was concerned that Howard would be pressured by lawmakers to oppose the increase while he was campaigning in the Legislature for re-election.

“A utility would probably not relish the thought’’ of having such a request come up before the election, said Scott Elliott, an attorney for large industrial power users.

Elliott and Sierra Club lawyer Bob Guild said the email provides a glimpse of how important PSC races are to utilities – and why keeping incumbents on the commission are important to power companies.

“That is documentation of what seems evident: that the incumbent commissioners are the candidates for the power company,’’ Guild said, noting that the PSC “has rubberstamped every rate increase, every cost overrun involving’’ the nuclear project.

The Public Service Commission, a regulatory panel whose members make more than $100,000 annually, decides whether utilities can raise rates, as SCE&G did to finance its V.C. Summer nuclear plant expansion.

“It’s fair to say that some utilities, particularly the ones that are most visible, would be interested in the outcome of the PSC election,’’ Elliott said. “It would make a difference as to the nature of the regulation and the cost of regulations’’ on utilities.

The V.C. Summer nuclear project was in 2008 pronounced as the first of a new wave in nuclear reactor construction as the nation searched for nonpolluting energy to replace carbon-belching coal plants. But despite SCE&G’s assurances of success to the PSC and others, the project experienced cost overruns that threatened to double its price tag to more than $20 billion. In March of this year, chief contractor Westinghouse filed for bankruptcy.

On July 31, after nearly a decade of planning and construction, SCE&G and junior partner Santee Cooper walked away from the project. They cited the Westinghouse bankruptcy, rising expenses and falling demand for energy as reasons they could not continue the work. When the project shut down, the companies had spent $9 billion in about a decade. The abandonment left 5,000 people out of work and ratepayers mad that they had been billed for a project that would not be completed

SCE&G did not answer directly any questions about the two candidates and efforts to reach Howard were unsuccessful.

A commissioner since 2004, Howard told legislators during a screening hearing last year that South Carolina’s power sources “can all be nuclear as far as I’m concerned.’’ He was among the PSC members who voted unanimously for the V.C. Summer nuclear project when it came to the commission in February 2009.

Records reviewed by The State indicate that SCE&G was aware of Howard’s support for the nuclear industry when they were considering when to make the budget increase request to the PSC.

SCE&G officials “are concerned about the first congressional district seat, currently occupied by Butch Howard,’’ the May 2016 email said. “A challenger … was recruited from the conservation group community and appears to be a formidable candidate for that seat.’’

The email, written by Santee Cooper’s Michael Crosby to agency head Lonnie Carter, goes on to say “we can assume SCANA files shortly after the election.’’

A day after Howard won the race against Williams on May 25, 2016, SCE&G petitioned the PSC for permission to increase its budget, according to legislative and commission records. The seven-member commission signed off on the budget increase late in 2016. The PSC has approved nine rate increases of about $1.7 billion to finance the V.C. Summer nuclear expansion.

SCE&G didn’t dispute the importance of PSC elections, although it declined to discuss the May 2016 race.

“SCANA closely monitors the elections of the Public Service Commission of South Carolina just as we do any other governmental agency with oversight of the utility industry and public policy issues that are important to our business, employees, customers, and communities,’’ spokeswoman Rhonda O’Banion said in an email Friday. She noted that a screening report of the candidates found them both qualified.

Williams, who is a staff member with the Conservation Voters of South Carolina, had been encouraged to run by the conservation community. She had scored better on a screening test than Howard, according to the Public Utilities Review Committee.

In an interview Friday, Williams said she never heard any support from SCANA for her candidacy. And she also said the state’s electric cooperatives supported Howard. The cooperatives provide power to rural South Carolina residents.

Mike Couick, the cooperatives director, said both candidates were qualified and impressive. But since Howard was an incumbent, he got the edge, Couick said.

Williams declined further comment, except to say the Public Service Commission election process needs improvement. While potential candidates go through a screening process, the state law doesn’t keep enough distance between utilities and the PSC, said Williams, who also lost a previous bid to unseat Howard.

“As described, the Santee Cooper memo clearly demonstrates the need for firewalls between the public utilities and the PSC,’’ Williams said in an email to The State. “South Carolina deserves a PSC that serves the interests of ratepayers and advocates for a better, more efficient and inclusive energy future for everyone.’’

This story was originally published October 6, 2017 at 10:18 PM with the headline "SCE&G delayed budget request for bungled nuke project until after longtime utility regulator re-elected."