Applause erupts after McMaster implores lawmakers to replace Base Load Review Act
The S.C. House plans to stop SCE&G from charging its 700,000 customers any more for a failed nuclear project, at least until a state commission decides whether the utility deserves the added money.
A proposal that House GOP leaders discussed with rank-and-file members Tuesday afternoon temporarily would lower the average SCE&G customer’s power bill by about $27 a month.
That’s how much the Cayce-based utility is charging its customers to finance its failed, $9 billion V.C. Summer nuclear expansion construction project. The utility abandoned that project last July after years of costs overruns and construction delays.
S.C. House members said Tuesday the new proposal strikes a balance between what lawmakers want to do – protect South Carolinians from higher electric rates – and what lawmakers can do under state law. House leaders worried the chamber’s original proposal — to roll back permanently all of SCE&G’s nuclear-related charges — might not survive a court challenge.
The new proposal was received well at meetings of the House’s Republican and Democratic caucuses, lawmakers said.
“We heard from everybody throughout this whole process,” said state Rep. Micah Caskey, a Lexington Republican who sat on the House committee that investigated the nuclear fiasco. “When we’ve been presented with information and legal opinions, we’ve taken that information on board and adapted throughout.”
State Rep. Russell Ott, the Calhoun Democrat who was vice chairman of that special committee, said the plan shows the House is working for S.C. electricity customers.
“This is step in that direction,” Ott said. “It gets them that protection as soon as possible.”
Dominion deal on the rocks?
An SCE&G spokesman hinted the utility may challenge the House plan in court, if it passes the Legislature.
If passed, the proposal could lead Virginia-based Dominion Energy to withdraw its offer to buy SCE&G’s parent company, SCANA. As part of that deal, Dominion promised it would give SCE&G electric customers a $7-a-month rate cut and a cash refund worth about $1,000 per household.
However, Dominion has said the deal is off if it can’t charge SCE&G customers for the failed nuclear project for another 20 years.
Some lawmakers said Tuesday they don’t think the new proposal is a deal-killer for Dominion.
But the Virginia utility would not speculate on the proposal’s consequences.
Shortly after news of the proposal broke Tuesday, Wall Street investors began betting Dominion would drop its roughly $50-a-share offer to buy SCANA.
SCANA’s stock price sank to $40.74 a share, down more than $2.50 a share from when markets opened. Meanwhile, reflecting the wariness of some investors who do not like the SCANA deal, Dominion’s stock rose to $75.32 a share, up 60 cents.
The widening gap between the companies’ stock prices indicates growing concern the Legislature’s actions will kill the Dominion deal.
“We still believe our proposal is the best option for all stakeholders,” a Dominion spokesman said Tuesday. “We remain optimistic it will be viewed favorably by lawmakers and regulators so we can begin providing the cash payments, rate reductions and other benefits to customers as soon as possible.”
‘A stronger bill’
The House’s plan, expected to pass as early as Wednesday, would stop SCE&G’s $27-a-month nuclear surcharge until the state Public Service Commission decides whether the utility can continue charging its customers for two unfinished reactors in Fairfield County.
SCE&G has submitted plans to charge customers another $10.5 billion for the failed project in the form of higher power bills over the next half century.
But a state regulator and other independent groups have challenged those proposed charges.
The House’s new proposal is an amendment to a bill that would repeal the Base Load Review Act. That 2007 law encouraged the V.C. Summer project by limiting SCE&G’s financial risk and enabling the utility to charge its customers for the reactors during their construction.
For months, lawmakers have said they want to roll back the $37 million a month that SCE&G now collects from its customers for the unfinished reactors. About 18 percent of the average customer’s power bill now goes toward paying off the useless reactors.
But lawmakers also worry the S.C. Supreme Court could strike down as unconstitutional a retroactive repeal of the 2007 law.
The plan that surfaced Tuesday is more likely to withstand a legal challenge from SCE&G, lawmakers said. The proposal still would repeal the Base Load Review Act, but only prospectively — barring future charges to customers for unfinished power plants.
“It will make it a stronger bill,” said state Rep. James Smith, a Richland Democrat running for governor this year.
Sue? ‘The company would have no choice’
SCE&G still may mount a legal challenge, a spokesman said Tuesday.
“In the event legislation is passed that interferes with the regulatory process and changes the legal standards for recovery of those costs in a way that would inflict severe damage on the company, the company would have no choice but to seek legal recourse at that time,” spokesman Eric Boomhower wrote in an email.
If passed by the House, the proposal still must win approval in the state Senate.
It also must get a sign-off from Republican Gov. Henry McMaster. However, the proposal seemingly meets McMaster’s criteria for a deal. He has said he would veto any bill that allows SCE&G to continue charging its customers for the scuttled reactor project.