Politics & Government

SC utility watchdog wants regulators to declare SCE&G lied about nuclear project

Regulators approve Dominion’s buyout of SCANA: What it means

Office of Regulatory Staff Executive Director Nanette Edwards explains what today's vote means for the rate payer.
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Office of Regulatory Staff Executive Director Nanette Edwards explains what today's vote means for the rate payer.

South Carolina’s utility watchdog has asked the S.C. Public Service Commission reconsider its decision not to rule that SCE&G intentionally misled regulators years ago about its doomed nuclear plant construction project.

The S.C. Office of Regulatory Staff filed a petition late Friday asking the PSC for an explicit finding that SCE&G imprudently moved ahead with construction of the V.C. Summer Nuclear Station expansion in March 2015 despite warnings about the project’s cost and flaws.

Earlier this month, the PSC issued a ruling allowing Virginia-based Dominion Energy to buy SCE&G’s parent company, SCANA, and slash SCE&G’s nuclear-bloated electric rates by about $22 a month. But after some internal debate, the PSC stopped short of calling out SCE&G for withholding important information to win rate-hike cases and keep the foundering project alive.

Regulatory Staff wrote Friday “it is beyond dispute that SCE&G failed to disclose any iteration of the Bechtel Report to ORS or the Commission.” The agency said the “Commission cannot side-step the issue of prudence or imprudence” but instead must “make a clear finding” that SCE&G could have acted to anticipate, avoid or minimize nuclear construction costs.

Regulatory Staff Director Nanette Edwards said such a finding is needed “to restore public trust and hold the utility accountable.”

A SCANA spokesman said the utility would need to review the petition and would not comment Friday night.

“The commission’s thoughtful, well-reasoned order speaks for itself,” Dominion Energy spokesman Ryan Frazier said.

Ratepayers have paid more than $2 billion in higher power bills for the unfinished reactors in Fairfield County. And SCE&G’s roughly 730,000 customers will pay another $2.3 billion for the failed project over the next 20 years under the approved Dominion deal.

Regulatory Staff also want the PSC to clarify that Dominion must track and pass down to customers all of its savings from the recent federal tax cuts. It also is pushing the PSC to lower slightly how much profit Dominion can earn while paying down the nuclear debt, and return close to $400 million previously collected from customers for costs that are now disallowed.

Regulatory Staff wrote that it wants the PSC to impose conditions requiring a review prior to any possible expansion by Dominion’s of the Atlantic Coast Pipeline into South Carolina.

The question of imprudence came up during the PSC’s announcement of its ruling Dec. 14. During a somewhat rowdy hearing, commissioner Thomas Ervin asked that the PSC rule that SCE&G intentionally misled them years ago.

Ervin based his case on SCE&G’s decision to keep secret the Bechtel Corp.’s sobering, February 2016 report on the project’s flaws and the utility’s March 12, 2015, testimony that the nuclear project would cost only $700 million more to complete — despite an internal SCE&G analysis that concluded it would actually cost closer to $1.2 billion.

“SCE&G filed costs and a construction scheduled prepared by the Consortium which neither SCE&G nor Santee Cooper deemed reliable,” Regulatory Staff wrote in its petition Friday. “Yet, SCE&G made representations to this Commission that the Consortium cost and schedule were accurate, while knowing it was both unattainable and inaccurate. SCE&G then took every step it could to keep that information hidden. The Commission cannot conclude that such conduct was either prudent or acceptable to the Commission.”

At the Dec. 14 hearing, Ervin said an explicit — not casual — declaration of imprudence was needed to send a public message that “that this kind of conduct is not going to be tolerated in the future, not just by SCE&G but any regulated utility that comes before us.”

“If they choose to hide, mislead, misrepresent facts willfully and knowingly when they are sitting on the truth and not sharing it with us, that is conduct that has to be recognized as imprudent, to say the least,” Ervin told commissioners. “We need a specific finding if for no other reason than for the precedental value of it.”

Commissioner Elliott Elam, who made the motion approving the merger and setting SCE&G’s rates, said he thought such a move was unnecessary because Dominion had already agreed not to charge customers for nuclear construction costs SCE&G incurred after March 12, 2015.

Elam said he was hesitant to allege SCE&G utility executives effectively committed a crime by withholding information. (SCE&G’s past public statements painting a rosy picture of the project currently are the subject of state and federal investigations, sources have told The State).

“In concept, I will say, yes, I believe we had information withheld from us,” Elam said. “I think everybody has said that. As far as intent, I don’t know that we necessarily have adequate information to establish that kind of intent or whether that matters.

“The result is an implicit, at least, recognition that we didn’t have all the information that we should have had.”

Ervin didn’t share Elam’s hesitancy.

“We’re not talking about a criminal finding at all,” he said. “What we’re talking about is just that by a preponderance of evidence, the commission finds that it was imprudent.”

Ervin said he believes state law requires the PSC to have justification behind the rate cut it ordered, arguing that it should be the finding of imprudence.

“I’m willing to go with the March 12, 2015, date, but there has to be a factual basis for it,” he said. “That factual basis is the willful conduct of SCE&G, and I would encourage the commission to adopt it as part of this final order.”

Ervin was the only commissioner who voted for his amendment.

The PSC has 20 days to grant or refuse Regulatory Staff’s request.

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Tom Barton covers South Carolina politics for The State. He has spent more than a decade covering local governments and politicians in Iowa and South Carolina, and has won awards from the S.C. Press Association and Iowa Newspaper Association for public service and feature writing.

Avery G. Wilks is The State’s senior S.C. State House and politics reporter. He is currently filling in as an editor of The State’s award-winning State House team. He was named the 2018 S.C. Journalist of the Year by the South Carolina Press Association. He grew up in Chester, S.C., and graduated from the University of South Carolina’s top-ranked Honors College in 2015.