Politics & Government

Judge expected to strike down controversial nuclear law that raised SCE&G’s rates

A state judge soon will find unconstitutional the infamous law that enabled South Carolina’s $9 billion nuclear construction fiasco, according to a state senator.

That ruling could reduce how much SCE&G’s 730,000 electric customers pay for power monthly by slashing the amount the Cayce-based utility can charge them to pay off the failed V.C. Summer Nuclear Station expansion project, which the utility abandoned in July 2017.

The ruling could be disastrous for SCE&G, which has threatened to file for bankruptcy if its shareholders are forced to eat the nuclear project’s costs.

Stock in SCE&G’s parent company, SCANA, plummeted Monday as news of the impending ruling spread. SCANA shares were down more than $6 a share at one point Monday before closing at $36.40, down almost 11 percent.

SCANA shares were down, in part, because the judge’s ruling could cause Dominion Energy to walk away from its proposed buyout of SCANA. The Virginia-based utility has said it will pull out of that deal if lawmakers or a court throw out the 2007 Base Load Review Act, blocking SCE&G from charging its customers to recover its almost $5 billion in nuclear-related costs.

State Sen. Brad Hutto, D-Orangeburg, said the 2007 law would be declared unconstitutional at a Charlotte energy conference Friday, according to the Charlotte Business Journal. Several sources independently confirmed to The State Hutto’s understanding of Circuit Judge John Hayes’ upcoming order, which could be announced as early as next week.

After its stock plunged Monday, SCANA confirmed in a statement to investors that Hayes had asked attorneys suing the utility to draft orders for him ruling the Base Load Review Act violates the S.C. Constitution.

SCANA said it would give Hayes feedback on parts of those orders, adding, “The judge has indicated to the attorneys ... that no final decision has been reached at this time.”

The impact of Hayes’ potential ruling is far from definite.

The proposed judgment is part of a class-action lawsuit in which SCE&G ratepayers are seeking to stop the utility from charging them for the failed V.C. Summer project. The ratepayers also are trying to force the utility to refund the more than $2 billion it already has charged customers for the project.

Hayes’ ruling would not take effect until the ratepayers’ trial – which has not started – ends, Hutto said. The ruling likely will be appealed to the S.C. Supreme Court by the losing side in any event, he said.

Attorneys involved in the case, including the S.C. attorney general’s office, were asked recently to draft proposed rulings for Hayes, Hutto and others said. In those drafts, Hayes asked the lawyers to include a finding that the Base Load Review Act is unconstitutional, they said.

The 2007 law, written in part by an SCE&G attorney, enabled the utility to charge customers billions of dollars while the project was being built and even after it failed.

Since work on the project started nearly a decade ago, SCE&G electric customers have paid more than $2 billion — $27 a month on the average residential customer’s bill — for two unfinished nuclear reactors that were abandoned without ever producing any power.

SCE&G has fought to continue charging customers for the unfinished reactors, citing the 2007 Base Load Review Act.

Hayes’ proposed ruling would come just as the S.C. Public Service Commission, which sets utility rates, launches a month-long hearing next week into the V.C. Summer project’s failure. That case will decide who — SCE&G’s customers, shareholders or both — will have to pay off the utility’s nuclear construction debt. The case also will determine whether Dominion can complete its purchase of SCANA.

Hutto said Hayes’ ruling could affect the PSC case.

“Dominion, SCANA and the PSC will sit up and take notice that the judge is going to make this finding,” the Orangeburg Democrat said.

Bob Guild, an attorney for environmental groups petitioning the PSC to slash SCE&G’s rates, agreed.

“Anything that casts doubt on the legal basis for the company to get the relief they’ve asked for is good,” Guild said.

Along with Guild, the state’s utility watchdog — the Office of Regulatory Staff — has argued SCE&G fraudulently raised electric rates to pay for the nuclear project by misleading the PSC for years about problems at the doomed V.C. Summer project.

On Friday, SCE&G filed a motion with the PSC arguing Regulatory Staff was “leading the charge to rewrite history ... and retroactively reverse a decade of carefully considered (PSC rate) orders that do not now suit the state’s political interests.

“This is not a result that the law allows,” the utility’s lawyers wrote.

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