SCE&G’S SALE to Dominion Energy could go a long way toward addressing the top concern of legislators returning to Columbia Tuesday for the 2017 General Assembly: cutting the bills S.C. electricity customers pay for failed nuclear reactors. I’ll explore that topic in my next column.
But the Legislature still has a lot of repair work to do in the wake of the $9 billion disaster that is the V.C. Summer nuclear construction project. While SCE&G and Santee Cooper bear much of the blame, this never would have occurred without the blessing and encouragement of the South Carolina General Assembly.
In fact, the whole mind-boggling mess is a microcosm of much that is broken about our state government:
The Legislature passes a law it doesn’t understand, because people it trusts — who happen to provide lots of campaign donations to legislators — promise it does something the Legislature wants. Because of the Legislature’s refusal to empower anyone but itself to do anything important, the people who are supposed to make sure the law works either aren’t allowed to do the jobs they need to do or can’t be held accountable for their failures, or both.
Fixing those root causes are the most important things the Legislature could do this year.
Legislators concluded in 2007 that South Carolina needed to go big into nuclear, so they passed a law that SCANA lobbyists said would give the utility the protection and incentives it needed to build the nation’s first new nuclear reactors in decades. The problem was that the law went too far, actually giving utilities an incentive to fail. I don’t think SCE&G set out to fail, but the law made it easy to be less careful about its spending and oversight — much the way critics complain (correctly) that government budgeting policies often encourage agencies to spend money they don’t need to spend.
This problem was compounded by laws that required a consumer watchdog to protect the financial interests of utilities, and insulated the state-owned utility — SCE&G’s partner in the nuclear construction project — from any kind of accountability, political or otherwise.
It’s not clear how legislators should resolve all of the problems that contributed to and grew out of the failed construction project. But some solutions are clear:
▪ The job of the Office of Regulatory Staff should be to protect consumers. Period. A 2004 law also required the agency to protect “the financial integrity of the state's public utilities” and economic development. It’s fine to ask the regulatory agency — the Public Service Commission — to balance those three interests. But the Office of Regulatory Staff was created to replace the old Department of Consumer Affairs, and its mandate should be to fulfill that role.
▪ State-owned Santee Cooper should be subject to the same regulations as SCE&G and other utilities. Under current law, it can raise rates and join in risky partnerships and embark on new construction with only the approval of its board of directors, who are insulated from accountability for their decisions. Its rates and its construction plans should have to be approved by the Public Service Commission.
▪ The governor, who appoints the members of the Santee Cooper board, should be able to remove them if he thinks they’ve made bad decisions. That seems obvious, particularly when you consider how much Santee Cooper and SCE&G customers could end up paying because of bad decisions Santee Cooper made. But under the current law, board members can’t be removed unless they refuse to attend board meetings or engage in some wrongdoing that could land them in jail.
▪ The Legislature needs to increase the odds that legislators and the public can understand the bills it passes. This has been needed for a long time, but the collapse of the V.C. Summer project underscored that need by highlighting the 2007 Base Load Review Act (which I’ll discuss in my next column). That legislation was sold as a way to make it easier for utilities to get financing to build nuclear reactors, but it was a terribly complicated bill that did that in ways that should concern even the biggest nuclear advocates.
If knowledgeable, neutral experts had been asked to review the bill, they would have pointed out that it did this by making it practically impossible for regulators to turn down any rate increases once they declared that a proposed construction project was “prudent” — even if imprudent actions were taken later. And that it allowed utilities to keep charging customers for projects they abandoned. And that it guaranteed utilities a profit on those failed investments. Neutral experts also would have noted that it might violate the state and federal constitutions, on several grounds.
But neutral experts weren’t consulted, because the bill was promoted by lobbyists for SCANA and other utilities that legislators trust, and it was sold as accomplishing goals that legislators shared.
Before most tax and spending bills can be passed, state experts have to certify how much they would increase or reduce tax collections or how much they would cost to implement. We need a similar requirement for other bills.
I’m not sure which bills should be included, or who should do the vetting. Maybe we simply start with bills that affect utilities — some of the most complicated — or with bills that could affect property rights. And I know the attorney general’s office has more than enough on its plate, but it’s hard to find better legal and constitutional analysis than from the professional staff that produces attorney general’s opinions.
Here are some other pieces I’ve written about this that you might find helpful:
Ms. Scoppe writes editorials and columns for The State. Reach her at email@example.com or (803) 771-8571 or follow her on Twitter or like her on Facebook @CindiScoppe.