How SC’s nuclear project collapsed: A timeline
SCE&G should have abandoned construction of a Fairfield County nuclear plant more than two years before the project ultimately collapsed, state regulators argue in their latest filing, adding the utility’s ratepayers should not be expected to pay for any of the project’s costs after 2015.
In testimony filed late Monday with the state Public Service Commission, the Office of Regulatory Staff argued all SCE&G’s construction costs to add two more nuclear reactors to the V.C. Summer Nuclear Station should be disallowed after March 12, 2015, as “imprudent.” That translates to disallowing about $1.87 billion in costs by SCE&G and its corporate parent, SCANA.
From that date onward, regulators argue, “SCE&G knew construction was delayed by years and would cost billions more than it was telling the Public Service Commission.”
“SCE&G deliberately and repeatedly misled the PSC and ORS by withholding key information on the projected construction schedule,” nuclear industry expert Gary Jones says in his prefiled testimony for Regulatory Staff.
In its filing, the state agency says all SCE&G rates meant to cover costs for the nuclear project should be “permanently ended,” and all money collected under the utility’s old rates since construction was halted on July 31, 2017, should be credited back to SCE&G’s ratepayers.
If approved by the Public Service Commission, Regulatory Staff’s request would reduce the rates of SCE&G 730,000 customers by more than 20 percent from the amount the utility was charging before the Legislature imposed a temporary 15 percent rate cut this summer. Regulatory Staff is calling for a rate reduction of $193.3 million a year by January 2019.
SCE&G, which did not respond to a request for comment Tuesday, has proposed cutting its rates by 8 percent.
Jones argues SCE&G “repeatedly and deliberately misled” state regulators by “withholding key information on the projected construction schedule,” beginning with a March 12, 2015, schedule given regulators. The utility knew that schedule was unrealistic, regulators now contend, based on recently recovered internal documents and communications.
“I conclude that SCE&G itself did not believe the cost and schedule it submitted to the PSC, but rather only sought the approval of those revisions as a means to gain a rate increase,” Jones says in his testimony.
Jones also says the utility declined to share a revised construction schedule because doing so would have threatened billions of dollars in federal tax credits. The utility also withheld an outside consultant’s report on the nuclear project’s woes, done by the Bechtel Corp. engineering and construction firm, long after it became apparent to regulators some reassessment of the project was underway.
Regulators first became aware of Bechtel’s involvement at an October 2015 meeting with utility employees, Jones said, when “a person unknown to ORS” stood up to “thank SCE&G personnel for all their good cooperation and support during the assessment that had just been completed. The individual then donned a Bechtel hardhat.”
In total, SCE&G’s customers have paid more than $2 billion to finance the bungled $9 billion project.
In its testimony prefiled with the Public Service Commission, Regulatory Staff does not oppose SCE&G parent SCANA being acquired by Virginia-based utility Dominion Energy, “subject to certain performance standards and conditions.”
However, Dominion has threatened to walk away from that deal if SCE&G’s rates are cut.
In response to the regulators’ filing, Dominion said through a statement that it was “pleased” Regulatory Staff recognized the benefits of a merger, but “we disagree with many of the ORS’ specific calculations as to rates and rate base.
“Per the terms of our merger agreement, Dominion Energy will not close a transaction that deviates from our net economic proposal,” the company’s statement said. “However, we are hopeful that once we are able to present our case to the South Carolina Public Service Commission, commissioners will agree that the Dominion Energy-SCANA customer benefit plan is the best option for SCE&G customers.”
The Public Service Commission will hold hearings in November on that buyout proposal and SCE&G’s rates.