Ratepayers win victory in fight to recover money from failed SCE&G nuclear project

V.C. Summer nuclear site in Fairfield County, SC
V.C. Summer nuclear site in Fairfield County, SC

SCE&G customers who have paid nearly $2 billion for a failed nuclear construction project scored a victory Wednesday that could lead to a cut in power bills of up to 18 percent.

The S.C. Public Service Commission denied SCE&G’s request to throw out a legal case that seeks to eliminate charges customers now pay for the shuttered project. The commission also agreed not to dismiss a case that seeks potentially billions of dollars in customer refunds from SCE&G.

Wednesday’s decision was a rare win for ratepayers and a blow to SCE&G, which faces withering criticism for failing to complete the V.C. Summer nuclear project with its state-owned partner Santee Cooper.

In deciding to keep the rate cases alive, the PSC now plans to hold a hearing next year to determine whether cutting the charges and making refunds are wise ideas. The hearing is among several ways ratepayers could be reimbursed. The Legislature also is considering bills to help reduce charges by SCE&G for the nuclear project.

The 18 percent charge customers now pay for the twin reactors amounts to about $27 on the average residential power bill. The state Office of Regulatory Staff wants to wipe out that charge since the reactors won’t be built.

Whether the commission will eventually order rate cuts or refunds won’t be known until next year, but SCE&G’s critics were elated Wednesday that the PSC supported customers over the Cayce-headquartered power company.

They said the PSC has sided with SCE&G consistently in the past on the company’s plan to bill ratepayers for the V.C. Summer project. Customers have been hit with nine rate hikes to pay for the nuclear expansion effort under a 2007 law that made financing the project easier.

“I think there is a chance that we will get paid back,’’ said Leslie Minerd, a Columbia activist who has fought the nuclear construction project for a decade. “This has been a hard road.’’

Attorney General Alan Wilson and the state Office of Regulatory Staff also applauded the PSC’s decision to keep the ratepayer cases alive.

“We look forward to the Public Service Commission addressing the issue of fair and reasonable rates for South Carolina ratepayers,” Wilson said in a prepared statement.

SCE&G, which supplies energy in the Columbia and Charleston areas, says it can’t afford to cut the entire nuclear charge from ratepayers’ bills because the charge generates about $450 million annually. Without revenues from the charge, the company could be forced into bankruptcy, SCE&G says. The company also opposes refunds to customers.

Company spokeswomen Ginny Jones and Cathy Love said SCE&G was disappointed in Wednesday’s PSC decision, but would work with the utility oversight board.

“We are encouraged that the commission will be having a hearing,’’ Jones said. “We think that will be a chance to get all the information from all parties, with all the facts on the table, and make a good decision for the benefit of our customers and the state as a whole.’’

In a separate action, SCE&G plans to file its own request to lower rates in early January. The company has proposed cutting residential power bills by about $5, or about 3.5 percent.

On Wednesday, SCE&G was seeking to dismiss two cases, one by the state Office of Regulatory Staff to cut the $27 nuclear charge from power bills and another from two environmental groups, who sought refunds for the nearly $2 billion customers already have spent on the project. The utility made its arguments before the PSC last week and was awaiting a decision.

The commission, which agreed to merge the cases, also ordered the state Office of Regulatory Staff to conduct an audit on SCE&G’s rates. The audit, due in 30 days, will look at SCE&G’s revenues to determine whether the company’s rates are fair and reasonable to customers. It also will evaluate SCE&G’s claims that cutting the rates substantially could lead to bankruptcy, PSC commissioners agreed.

“The magnitude of this case has an impact on the state of South Carolina,’’ Commissioner Elliott Elam said in calling for the audit.

SCE&G and partner Santee Cooper abandoned the nuclear project July 31 after spending $9 billion and about a decade on the project. The decision left more than 5,000 people out of work and ratepayers on the hook for a pair of reactors that would not be built. The shutdown sparked outrage among ratepayers and public officials, resulting in legislative hearings and federal and state investigations on why the project failed.

SCE&G and Santee Cooper blamed the failure on the bankruptcy of lead contractor Westinghouse and rising costs. The project was initially to cost about $11 billion, but recent estimates placed the overall cost at more than twice that amount.

In addition to rate hearings at the PSC, bills before the Legislature also would halt the nuclear charges and potentially lead to refunds for what customers already have paid.

One bill, introduced in the House, would give the PSC more authority to remove rate increases associated with the project’s construction. Another bill in the House gives the PSC explicit authority to order refunds to ratepayers for costs associated with the bungled nuclear project. A similar bill also has been filed in the Senate.

Columbia Rep. James Smith, a Democratic candidate for governor, said the PSC might be able to act faster on the issue than the Legislature because the House and Senate would have to agree on which bill or bills to pass. At the same time, any legal appeals of a PSC decision could slow down a final verdict on whether to cut bills or refund money for ratepayers, he said.

Either way, “this will be on the front burner when we get back in January’’ for a new Legislative session, Smith said. “I would hope the PSC would take action and not wait on the House and Senate.’’

Friends of the Earth and the Sierra Club had anticipated the PSC would rule against dismissing the case. In a news release earlier this week, Friends of the Earth said ruling against SCE&G would protect its rights to seek refunds for the utility’s customers.

“While we are representing our members in our work at the PSC we are also representing the public interest in how matters unfold on the nuclear project, including advocating for a better, more sustainable energy future in South Carolina,” Friends of the Earth adviser Tom Clements said in the release.