Politics & Government

With 2 days left, SC Legislature could fail to pass bills fixing VC Summer fiasco

Nearly 11 months after two S.C. utilities abandoned their $9 billion effort to build two nuclear reactors, the S.C. General Assembly has yet to pass any laws addressing the largest financial debacle in state history.

That may not change this week.

And after months of furious rhetoric from lawmakers, time for action is running out as legislators return to Columbia for a special, two-day session Wednesday and Thursday. Legislators plan to finalize the state's 2018-19 budget and pass a package of bills aimed at protecting S.C. residents who continue to pay higher power bills because of the V.C. Summer nuclear plant fiasco.

But their odds of success are far from guaranteed.

House and Senate negotiators still have not hammered out their differences over the state's $8.2 billion general fund budget or a pair of nuclear proposals that would restructure the state's utility watchdogs and cut the power bills of customers of SCE&G, the Cayce-based power company that led the doomed V.C. Summer project.

The budget eventually will pass. A budget is required under state law.

But the legislative clock could run out on the nuclear bills.

Lawmakers involved in the negotiations over the nuclear proposals say they are optimistic they will reach an agreement to pass some of the bills. And they likely will have at least one more chance to pass them when they return to Columbia this fall to take up any budget vetoes by Gov. Henry McMaster and elect a new member of the state Public Service Commission, S.C. House Speaker Jay Lucas, R-Darlington, told The State newspaper last week.

But after inaction in the Senate, some bills likely are dead for the year. Those proposals would have toughened the state regulatory system that enabled the failed project, which has cost S.C. power customers $2.5 billion so far in higher power bills.

“If they do not pass long-term regulatory reform, I will consider it a grave disservice to the citizens of this state,” said Lynn Teague, who has followed the nuclear issues for the S.C. League of Women Voters.

‘We wasted a lot of time and effort’

State lawmakers promised sweeping changes after SCE&G and its minority partner, the state-owned Santee Cooper utility, abandoned the V.C. Summer nuclear construction project in July 2017 after years of cost overruns and construction delays, and $9 billion spent.

The project stands to cost SCE&G and Santee Cooper customers billions more as those utilities pay off their construction debt. About 18 percent of the typical SCE&G customer's power bill — or $27 a month — now goes toward the project. Much of that money has been forwarded to shareholders of SCE&G’s parent company, SCANA, in the form of dividends.

After months of hearings, the House passed a handful of bills earlier this year to: strengthen the state agencies that regulate utilities; fire the Santee Cooper board; sack the members of the Public Service Commission, which sets S.C. utility rates; shake up the state board that oversees energy policy and agencies; and slash SCE&G’s electric bills.

The proposals would have stiffened the qualifications necessary to serve on those boards and reduced the influence S.C. utilities have over their state regulator-watchdogs.

But the Senate Judiciary Committee never took up several of those bills for debate, and it took its time on the others. The full Senate passed just two bills back to the House — both in the final week of the Legislature's regular session, which ended in May.

“It’s a lost year for all of the reform component that the House put in during the offseason,” said House Speaker Lucas. “To me, we wasted a lot of time and effort in the House trying to reform a system that needed reforming.”

Efforts to reach Senate Judiciary Chairman Luke Rankin, the Horry Republican who leads the committee where several House bills died, were unsuccessful Friday.

However, Senate Minority Leader Nikki Setzler, D-Lexington, said senators have “moved on the bills that have come out of committee."

The Senate has "worked very diligently," Setzler said. But, he added, “This is a very complicated issue."

At an impasse

Even the bills that have been passed by both legislative chambers still face hurdles to becoming law.

Those proposals would:

Temporarily cut SCE&G’s power bills, which increased as the utility levied nine rate hikes over the past decade to help finance the failing V.C. Summer project.

Delay, until December, the state Public Service Commission’s decision on whether — or how much — SCE&G can continue to charge its customers for the two nuclear reactors that won’t be finished. The PSC also will decide then whether Virginia-based Dominion Energy can finalize its proposed buyout of Cayce-based SCANA.

Make the Office of Regulatory Staff, which polices utilities, a stronger watchdog for the public and create a consumer advocate to fight against proposed utility rate hikes.

Those proposals have been held up by a stalemate between the House and Senate over how deeply to cut SCE&G’s power bills.

Until recently, the House has insisted on cutting the full 18 percent of SCE&G’s power bills that currently is earmarked for the nuclear reactors, saying the utility’s customers should not have to pay any further for power plants that won’t generate a watt of electricity.

Senate leaders agree, but they are comfortable only with cutting SCE&G’s power bills by 13 percent. They arrived at that figure after commissioning a study that found SCE&G could survive at least a 13 percent cut without declaring bankruptcy. Also, cutting more could give SCE&G additional ammunition for the utility’s inevitable lawsuit against the state-imposed rate cut, Senate Majority Leader Shane Massey says.

“My concern is that if you go lower than that, if you get greedy with it, then customers are not going to benefit at all,” the Edgefield Republican said. “I don’t think there’s going to be much willingness to move below the number we’ve established.”

House and Senate negotiators have met publicly three times in the past two months, to no avail. At the most recent meeting, on May 23, the House proposed abandoning the argument over how deeply to cut SCE&G’s rates and insteadforcing some $300 million in customer rebates from the utility. Senators openly were skeptical that idea is constitutional.

Those negotiators next are scheduled to meet at 10 a.m. Wednesday, two hours before both the House and Senate gavel in their special session.

Several lawmakers involved in the process said last week they are optimistic the two sides will reach an agreement, adding staff and individual lawmakers have worked for weeks to iron out their differences.

“We’re going to do a whole lot to protect the ratepayer,” said state Rep. Kirkman Finlay, a Richland Republican on the nuclear conference committee.

If the two sides do reach a compromise, they may need to override a veto from Gov. Henry McMaster. The Richland Republican, in the middle of running for a full term in the governor’s office, has pledged to veto any bill that allows SCE&G to continue charging its customers for the Summer expansion project.

Meanwhile, Dominion has said it would pull out of its offer to buy SCANA and offer SCE&G’s customers a $1,000-a-household refund and $10-a-month rate cut if lawmakers meddle with SCE&G’s electric rates.

Reach Wilks at 803-771-8362. Follow him on Twitter @AveryGWilks.

Nuclear proposals and where they stand

Cutting SCE&G's rates: Senate Bill 954 temporarily would cut SCE&G's electric rates by up to 18 percent, the percentage of the utility's monthly power bills that currently is earmarked for the failed V.C. project.

The bill also would delay, until December, the S.C. Public Service Commission’s decision on how much SCE&G can continue to charge its customers for two nuclear reactors that won’t be finished. The PSC also will decide then whether Virginia-based Dominion Energy can finalize its buyout of SCANA, the Cayce-based parent of SCE&G.

The proposal currently is being debated in the Legislature's nuclear conference committee. Whatever version is approved by that committee must then be OK'd by both the full House and Senate.

Repealing the Base Load Review Act: House Bill 4375 would repeal — for all future projects — the 2007 state law that allowed SCE&G to charge its customers for the V.C. Summer expansion, during construction and after its abandonment.

It also would define the words “prudent” and “imprudent” for the Public Service Commission. Lawmakers wanted those words defined before the PSC uses them to judge whether SCE&G’s actions in managing the Summer project were reasonable and the utility’s costs justified. To recover its costs on the nuclear reactors, SCE&G must convince regulators its actions while overseeing their construction were prudent.

H. 4375 also is before the Legislature's nuclear conference committee.

Strengthening utility watchdogs: House Bill 4379 would create a “consumer advocate,” an attorney to fight for consumers in utility rate hike cases.

The bill, which the House passed on Jan. 24, also would give subpoena power to the Office of Regulatory Staff, the state agency that polices utilities, and remove a requirement that agency also look out for utilities’ finances. The proposal has passed both the House and Senate but hasn’t been finalized. The meat of the bill also has been wrapped into H. 4375, which has a better chance of passing.

More oversight for Santee Cooper: The House passed House Bill 4376 — sacking Santee Cooper's board and requiring the state-owned utility to seek the PSC's approval for any rate hikes — on April 4. But the proposal has gone nowhere in the Senate. It is unlikely to pass this year.

Firing the Public Service Commission: House Bill 4377 would sack members of the PSC — the state board that approved nine rate hikes to help SCE&G finance the V.C. Summer project — over the next two years. It passed the House on Feb. 20 but since has not been debated or voted on in the Senate Judiciary Committee. It also is unlikely to pass.

Shaking up who oversees energy regulators: On Jan. 25, the House passed a proposal to get rid of the state board that screens PSC members and Santee Cooper board members, and start over with a new board that offers more seats to members of the general public. But the bill, House Bill 4378, has not been taken up by a Senate Judiciary subcommittee. It is likely dead for the year.

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