How SC’s nuclear project collapsed: A timeline
IF YOU’RE trying to decide whether to move to South Carolina or New Mexico, the fact that we pay the highest electricity bills in the nation and New Mexicans pay the lowest would probably be relevant. And it would give you one thing to put on the “move to Nebraska” list.
But if your goal is to pass judgment on South Carolina’s utilities, the average-bill rankings that have been getting so much attention aren’t a good measure, because they tell us as much about how much electricity South Carolinians use as how efficiently the power is produced. What matters is the cost per kilowatt-hour of electricity.
That’s one of several sets of numbers that are important in helping us figure out how to recover from the financial disaster that resulted from the overdue, over-budget nuclear construction project that SCANA and Santee Cooper abandoned in July. And it’s one of several sets of numbers that we either haven’t seen or haven’t understood.
Another biggie is how much Dominion Energy wants to charge customers for the nuclear project if it purchases SCANA. But hold that thought for a moment while we talk about the kilowatt hours.
Utilities don’t charge a single rate for electricity. SCE&G for example charges residential customers a flat $10 fee, then one rate for the first 800 kilowatt hours and a slightly lower rate for each unit above that. So the best way to compare rates is by looking at the utilities’ revenue per kilowatt hour, which adds those three numbers and divides that by the energy used.
According to the State Energy Office, SCE&G customers paid 14.56 cents per kilowatt hour in 2016, the most recent year available. That’s 45 percent higher than the 10.01 cents paid in Duke Energy’s old Progress territory. It’s also significantly higher than the 11.01 cents that Duke Energy charges in its original service area or Santee Cooper’s 11.62 cents. And higher than all but five of the state’s 36 municipal utilities and co-ops.
Not surprisingly, nearly all of SCE&G’s extra cost is the result of the 18 percent nuclear surcharge that it’s continuing to collect since it abandoned construction of the two nuclear reactors. Without that, SCE&G’s rates would still be the highest of the investor-owned utilities, at 11.93 cents, but by much less.
Santee Cooper would be collecting 11.10 cents per unit without its 4.5 percent nuclear surcharge. That’s still more than Duke or Progress, which raises questions about how valuable a state-owned utility actually is.
Nationally, SCE&G’s residential rate is 31st highest among the 148 large privately owned electric utilities, and highest in the Southeast, according to data compiled by the Coastal Conservation League. So it’s high, but not the highest in the nation; it’s our average bills that are the highest, again reflecting how much energy we use. The other utility rates range from a high of 26 cents to around 6 cents.
When you plug those numbers into an interest calculator, you add $1.9 billion in profit to the initial $3.3 billion for a grand total of $5.2 billion.
The other numbers that have been difficult to wrap our arms around are how much SCE&G wanted to charge us for the abandoned reactors and how much Dominion wants to charge us. Dominion officials say they don’t know their number, but they’ve given us enough information to make a good ballpark guess.
In its January filing with the Securities and Exchange Commission, Dominion said it wanted to charge ratepayers for $3.3 billion in construction costs over 20 years. Dominion also said it wanted to add a return on investment — or profit — that, I’m told, would amount to about 5 percent. When you plug those numbers into an interest calculator, you add $1.9 billion in profit to the initial $3.3 billion for a grand total of $5.2 billion.
That’s what all customers would pay. About half of SCE&G’s revenue comes from residential customers, so this figure is consistent with what reporter Avery Wilks found when he went through a much more tedious process to determine that residential customers would pay $2.8 billion over the next 20 years for the nuclear project.
The numbers I’ve been able to work through suggest that SCE&G’s most generous pre-Dominion proposal would cost ratepayers at least three times as much as Dominion proposes to charge for the nuclear project.
Three-quarters of the nuclear surcharge could be eliminated if SCANA stopped paying dividends until its nuclear debt is paid off.
There are a lot of other numbers we need to consider as we sort through this mess, and you can find as many as I’ve been able to put together in “SC nuclear debacle, by the numbers.” But I’ll close with one fairly easy set of numbers that just hasn’t gotten as much attention as it deserves, outside a fairly tight circle of investment-savvy SCE&G customers: dividends.
On Thursday, SCANA reported a loss of $119 million for 2017, largely because it concluded that it was “probable” that it wouldn’t be allowed to collect all those many, many billions of dollars it wanted to collect for the nuclear project. It also announced dividends of 61.25 cents per share for the fourth quarter of 2017. This is in line with quarterly dividends for the past year and comes out to $87.5 million.
During that same three-month period, customers paid $111 million for the nuclear surcharge. Which is to say that customers paid for all of shareholders’ dividends, and then some. Or that three-quarters of the nuclear surcharge could be eliminated if SCANA stopped paying dividends until its nuclear debt is paid off.
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.