Dominion buys out SCANA: How we got here
The S.C. Legislature on Thursday overwhelmingly overrode Gov. Henry McMaster’s veto of a proposal to temporarily cut SCE&G’s electric rates by 15 percent, officially enacting a law aimed at saving the utility's customers some $260 million on their power bills through the end of the year.
The bill's passage sent shock waves through South Carolina's business and legal communities. It could prompt a lawsuit from SCE&G, which raised its rates nine times over the past decade to help finance a massive nuclear reactor project that collapsed last July. The Cayce-based utility has said it thinks the bill is unconstitutional.
The new law also could lead Virginia-based Dominion Energy to withdraw its offer to buy SCE&G's parent company, SCANA, and offer its electric customers a $1,000-a-household refund and a $10-a-month rate cut. Dominion has threatened to pull out of that deal if lawmakers meddle with SCE&G's rates, in part because it wants to charge SCE&G's customers another $3.8 billion for the failed project over the next 20 years.
Response from SCANA was muted Thursday. "We are aware of the governor's veto message and the Legislature's actions," a spokeswoman said. "We will not comment further at this time. "
Dominion was more outspoken.
"SCE&G customers have spoken loud and clear: They like the Dominion Energy proposal that includes more than $12 billion in customer benefits and another $19 billion in economic activity," the utility said in a statement. "Customers want stability, a permanent rate cut of 7 percent, and $1.3 billion in cash payments to SCE&G’s electric customers — equal to $1,000 for the typical residential customer.
"Unfortunately, legislators in Columbia didn’t hear them. As a result, it looks like a permanent solution — with refunds and rate cuts —will be delayed until later this year as the legal system sorts out these matters. We certainly hope this will occur as soon as possible for the sake of SCE&G customers."
The law directs the S.C. Public Service Commission to set the new rate within five days. It was passed 11 months after SCE&G and its minority partner on the project, the state-owned Santee Cooper utility, pulled the plug on the V.C. Summer Nuclear Station expansion in Fairfield County.
The utilities spent a combined $9 billion on two reactors before abandoning them last summer.
SCE&G's 700,000-plus customers already have paid $2 billion for the project in the form of higher power bills. Those customers could be made to pay billions of dollars more, depending on a December Public Service Commission ruling on who — SCE&G's customers, shareholders or both — should have to pay for the failed project. The typical SCE&G-served household pays about 18 percent of its bill — or $27 a month — for the project.
Santee Cooper's 2 million customers — those it serves directly and via 20 local electric co-ops — have paid more than $530 million in higher bills and face more rate hikes.
McMaster vetoed the proposal Thursday afternoon, saying lawmakers didn't go far enough. The Republican governor said legislators should have wiped out the full 18 percent portion of SCE&G’s electric bills that now pays for the failed nuclear construction project.
The veto was not a surprise. McMaster has said for months he would veto any bill that leaves SCE&G customers on the hook for the abandoned V.C. Summer reactors.
“Accordingly, I call on the General Assembly to sustain this veto, remain in session, and send me a bill that ensures SCANA ratepayers will not pay a single additional dollar towards the failed nuclear project,” McMaster wrote in his veto message to lawmakers.
The overwhelmingly Republican House overrode the GOP governor's veto by a 110-1 vote within minutes. The Republican-majority Senate followed suit soon afterward, 39-0.
“This is nothing but a political move by our governor,” said state Rep. Russell Ott, a Calhoun Democrat who was vice chairman of the special House committee that investigated the nuclear project’s failure. “It’s just not right. It’s just not honest.”
The temporary rate cut, if it survives the expected legal challenge from SCE&G, would remain in effect until the Public Service Commission's December ruling.
The plan passed overwhelmingly both chambers Wednesday after House and Senate negotiators reached a compromise on how deeply to cut SCE&G’s rates.
The House initially had agreed with the governor in wanting to eliminate the full 18-percent nuclear surcharge.
However, the Senate insisted on cutting only 13 percent, an amount its leaders thought the state could defend in court based on when SCE&G’s alleged mismanagement of the project began and how that cut could affect the utility’s financial solvency.
House and Senate negotiators met in the middle — at 15 percent — wrapping the rate cut into a bill that also aims to strengthen the state’s utility regulation to better protect S.C. customers who can’t pick their power companies.
The law also:
▪ Creates a state consumer advocate's office to fight for ratepayers against utility rate hikes.
▪ Makes the state Office of Regulatory Staff, which polices utilities, a tougher watchdog by giving it subpoena power over utilities and removing part of its previous mission, which required it also to look out for utilities’ financial interests.
▪ Defines the words “prudent” and “imprudent” for the Public Service Commission, which sets utility rates and will decide in December whether SCE&G can continue charging customers for the failed nuclear project. Those definitions are important because, legally, SCE&G can charge its customers only for money it prudently spent on the project. With its law, the Legislature effectively is telling the PSC it should look at possible mismanagement.
▪ Repeals the Base Load Review Act. The 2007 law, which enabled the nuclear fiasco, was unlikely to be used again by a S.C. utility, but lawmakers wanted to get rid of it for good measure.