SOMETIMES boring-sounding reports say a lot more than we realize. And sometimes what sound like blockbuster reports don’t tell us nearly as much as we think they do.
Which brings us to last week’s report that said it was unlikely that SCE&G would file for bankruptcy if it had to stop collecting a $37-million-per-month nuclear surcharge from customers.
What the report did not say was that it was unlikely that SCE&G would file for bankruptcy if it was prohibited from charging customers any more for the abandoned reactors.
That sounds like the same thing, but there is a huge difference.
The current surcharge only covers interest on the $4.7 billion that SCE&G spent before pulling the plug on the two nuclear reactors it was building jointly with Santee Cooper. That’s what the state Office of Regulatory Staff said SCE&G could stop charging us without going bankrupt.
SCE&G still has to repay that $4.7 billion, and it will seek to recoup some of that money through an “abandonment petition.” Plus interest. (Dominion Energy says it will seek to recoup $3.3 billion of that, plus interest, if its purchase of SCE&G parent SCANA goes through.)
But the Public Service Commission hasn’t taken up the question of whether SCE&G, or Dominion, will be allowed to charge customers for the principal — or what Office of Regulatory Staff acting Executive Director Nanette Edwards calls “the brick-and-mortar costs.” So the PSC did not ask Ms. Edwards’ staff to project what would happen if that money can’t be collected.
Now, that seems like a crazy omission, since the discussion in Columbia is about how much more money, if any, SCE&G should be able to charge us for the project. But technically, the PSC has two different questions to answer — whether SCE&G can keep charging us interest, and, eventually, whether it can charge us for the principal — and it’s only focused on the first question right now. So that’s all the Office of Public Staff studied.
As Ms. Edwards told me on Tuesday: “ORS has not expressed an opinion as to the financial long-term viability of the company if they don’t recoup the brick-and-mortar costs.” For that matter, her staff hasn’t yet expressed an opinion as to whether SCE&G should be allowed to charge customers for any of the construction costs themselves. As far as she would go on that question was to tell me that “We may take the position that some portion of those capital costs are not prudent” and therefore cannot be charged to customers.
Note the word “some,” which is a lot different than “any.” Which suggests that, if this matter is left up to regulators, we may well end up paying for some of the construction costs.
Of course, I suspect that will happen no matter what, because I doubt the courts will let regulators or the Legislature relieve us of all of the burden of paying for the failed nuclear construction project. That’s because the courts have to balance the constitutional rights of customers, who shouldn’t have to pay for reactors that are not going to provide any power, with the rights of SCANA, which spent that $4.7 billion on a project that the state deemed necessary.
Legislators are interested primarily in reducing the amount of money ratepayers have to spend on the abandoned project, as they should be. Toward that end, they have jumped on the conclusion from state Solicitor General Bob Cook that, at least as applied, the Base Load Review Act that led to this mess is almost certainly unconstitutional. They haven’t paid much attention to his warning that going too far in the opposite direction also could be unconstitutional. They need to. They also need to keep in mind how changing the law would affect SCANA’s employees and stockholders and local creditors and our economy.
SCANA raised the specter of bankruptcy last month, and Dominion has continued that talk as it tries to convince lawmakers to sign off on its plan to reduce but not eliminate the amount of money customers have to pay for the nuclear project. The Virginia utility says it will walk away from the merger if the Legislature or regulators or the courts limit SCE&G’s ability to keep charging us for the nuclear construction.
Although some lawmakers say they don’t care if SCANA files for bankruptcy, most want to avoid that. So they jumped on the Regulatory Staff report as proof that SCANA and Dominion have been bluffing about bankruptcy. And somehow, they managed not to notice the huge caveat in the report about how the abandoned project “retains earning potential under the BLRA abandonment provisions.” After all, it can be difficult to notice things we prefer not to notice, particularly when not noticing them allows us to focus on those things we want to see.
Maybe SCANA and Dominion have been bluffing, and maybe SCANA could pay off its $4.7 billion nuclear debt without any more help from ratepayers. But the fact is that we are not one bit closer to knowing whether or not that’s the case than we were before that report was released last week.
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 firstname.lastname@example.org or (803) 771-8571 or follow her on Twitter or like her on Facebook @CindiScoppe.