South Carolina Electric & Gas Company has filed a federal lawsuit seeking to block S.C. regulators from following a newly passed law to temporarily slash the utility's power customers' bills by 15 percent.
But the S.C. Public Service Commission on Monday voted to enact the rate cut. It will move forward with slashing SCE&G's electric rates at a hearing on Tuesday, barring a successful legal challenge by the Cayce-based utility.
The legal proceedings unfolded Monday, days after the S.C. Legislature passed a new law that would nearly wipe out the roughly $27 per month SCE&G now charges its average customers for a failed nuclear construction project.
In its lawsuit, SCE&G seeks a judge's ruling that the law is unconstitutional and an injunction blocking the S.C. PSC from officially setting the lower rate. SCE&G complains that S.C. lawmakers passed a 2007 law encouraging the V.C. Summer nuclear expansion project and appointed state regulators who approved it, and now wants to punish the utility because the project failed.
The suit does not detail SCE&G's role in the failure, laying blame with the project's chief contractor, Westinghouse.
"Bowing to extreme political pressure, the South Carolina General Assembly now wishes it had not enacted the (2007 Base Load Review Act) and, through two new laws ... seeks to punish SCE&G by retroactively eliminating all rates increases since 2010 authorized under the BLRA," according to the suit. "If the Court does not grant immediate relief, SCE&G will suffer massive and irreparable harm, including millions of dollars in damages that cannot be recovered, a substantial loss of goodwill, and other permanent injuries."
The suit was filed Friday, a day after the rate-cut law was enacted, but released to the public Monday.
PSC commissioners voted unanimously, with no debate, Monday afternoon to put the 15-percent rate cut into effect. It will reconvene Tuesday to delve into the specifics of imposing the rate. Also on Monday, SCE&G filed an implementation proposal that commissioners want to review further. They requested more information from the utility as to how it would cut rates.
The utility requested the cut begin with the first billing cycle in August. The utility also requested the PSC implement the rate cut by allowing SCE&G to provide customers a one-time credit on their power bill. The credits would be calculated based on each customer's electricity usage and charges during the prior four billing months.
The law passed by state lawmakers last week requires the seven-member PSC to approve the rate cut within five days. It called for the rate cut to begin April 1, 2018, forcing a rebate from SCE&G.
SCE&G asserts the rate reduction and other aspects of the new law constitute an illegal confiscation of private property and deny the Cayce-based utility the due process required under law.
The suit argues that now that the expensive effort has failed, state lawmakers want to "change the proverbial rules of the game after it has ended."
The typical SCE&G household pays about 18 percent of its power bill — or $27 a month — for the failed V.C. Summer nuclear expansion project, which SCE&G and state-owned Santee Cooper abandoned last summer after spending $9 billion.
"The governor vetoed this bill because he believes it is unconscionable to continue charging South Carolina consumers for the V.C. Summer debacle," said Brian Symmes, spokesman for S.C. Gov. Henry McMaster. "SCANA shareholders must shoulder every penny of the burden from these bad decisions."
The Republican governor asked for a bigger rate cut in his veto, but lawmakers declined, voting overwhelmingly to override his veto.
SCE&G, a subsidiary of SCANA Corp., raised its rates nine times over the past decade to bankroll the failed nuclear project. Its 700,000-plus customers already have paid $2 billion for the project in the form of higher power bills. Meanwhile, Santee Cooper's 2 million customers — those it services directly and indirectly — have paid more than $530 million in higher bills and face more rate hikes.
SCE&G's customers or shareholders, or both, also could have to pay billions of dollars more to pay off the project's remaining debt, depending on how the Public Service Commission rules in the hearing on SCE&G's permanent nuclear rates, set for December.
The lawsuit, though, also challenges the law passed last week by lawmakers to delay the PSC's supposed July 12 deadline to rule on whether SCE&G can recover its billions of dollars in nuclear debt from customers. Legislators said they passed that law to give the PSC and state regulators more time to determine whether those costs were legitimate and should be passed onto customers.
SCANA spokeswoman Rhonda O'Banion said the company is not attempting to fast-track approval of its nuclear costs by challenging the new law. "We merely want a hearing on the merits before the Public Service Commission that is not affected by the unconstitutional directives of the recent legislation."
S.C. Office of Regulatory Staff Director Nanette Edwards said her agency does not buy the idea that the July 12 deadline ever existed. Edwards said the six-month deadline applies when a utility is requesting a change to a project's schedule design or cost estimate.
In this case and other cases where the plant is being abandoned, the law specifies no deadline, she said.
"We don't agree with where the company is coming from," Edwards said.
The PSC's permanent rates ruling — now set for December — also would dictate whether Virginia-based Dominion Energy can finalize its proposed purchase of SCANA and SCE&G. Dominion has proposed to buy out SCANA and offer SCE&G electric customers a $1,000-per-household refund and permanent $10-a-month rate cut.
But Dominion has said a rate cut could sink its offer to buy SCANA. A spokesman for Dominion on Monday said the utility regrets that "a permanent solution — with refunds and rate cuts — now will be delayed as the legal system sorts out these matters." And said the company hopes a solution will be worked out as soonas possible for SCE&G customers.
Jocelyn Boyd, the PSC's clerk, said the agency has sought approval from the S.C. attorney general's office to hire outside counsel to represent it in the lawsuit. PSC staff Monday declined to comment on the lawsuit, absent legal advice.
S.C. Sierra Club attorney Bob Guild, whose group is challenging SCE&G's ability to charge customers for the failed plant, said SCE&G's lawsuit doesn't hold water.
"It's particularly ironic that SCE&G says, 'Gosh, you singled us out,' " Guild said. "At the point of fact, there's only one (regulated) utility in South Carolina that melted down a $9 billion nuclear project. It's a class of one that they've volunteered to join."