IT’S THE ONLY thing most people seem to care about, but I’ve never been particularly worried about whether the Legislature slashes SCE&G’s nuclear surcharge. Even less so after the House decided to pursue an “experimental” rate cut — which would last only until regulators make a decision about how much, if any, the utility can keep charging ratepayers for its abandoned nuclear reactors.
And that decision would only apply until the courts reach their own decisions on a host of lawsuits, filed and probably yet to be filed.
Because with all the competing constitutional issues and all the litigious interested parties, the courts — not the Public Service Commission, and not the Legislature — are going to have the final say on our power bills.
That’s not to say it doesn’t matter whether the House’s bill to temporarily eliminate the surcharge remains tied up in a House-Senate conference committee that hasn’t met since it was appointed on May 10.
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It matters a lot — because of all the other stuff in H.4375.
The most important thing the bill does is extend the Public Service Commission’s deadlne to decide whether SCE&G can keep charging customers $37 million a month for the unfinished reactors that will never provide any electricity.
State law is a bit vague, but many legislators are convinced the law requires the PSC to decide by mid-July, and they have long worried that the Office of Regulatory Staff wouldn’t have enough time to compile the research that the commission needs to make an informed decision by then.
Senate Republican Leader Shane Massey told me earlier this month that SCE&G and would-be buyer Dominion Energy had agreed to the Senate plan to extend the Public Service Commission’s deadline to December, but he expects the utilities to insist on the July ruling if the Legislature fails to pass the extension.
Concerns about the time line intensified when the Office of Regulatory Staff, which serves as the regulators’ research arm, complained that SCE&G was refusing to turn over records that could show that it was never entitled to part of the surcharge. Sen. Massey called SCE&G’s refusal to turn over the documents — including audit reports, information it has provided to the FBI, meeting notes about the Bechtel report and other documents — “an attempt to run out the clock, so that ORS can’t present a thorough case even in November.”
So at his urging, the Senate added another important element to H.4375: power for ORS to demand records from utilities without signing confidentiality agreements, which SCE&G suggested it might require, and power to subpoena information from companies that aren’t regulated by the state, such as the construction project’s prime contractor, Westinghouse, and even Bechtel, which produced the scathing report that said SCE&G wasn’t managing the construction project properly.
The third important element in H.4375 is a definition of “prudent.”
That word is the linchpin of the Base Load Review Act, which promised SCE&G that the more it spent on the project, the more profit it could make. Once state regulators decided that it was “prudent” for SCE&G and Santee Cooper to build two nuclear reactors, it became almost impossible to turn down any of SCE&G’s rate hikes. Opponents would have to prove that SCE&G had made “imprudent” decisions, and, most imprudently, the law said that imprudent decisions by the utility’s contractors wouldn’t count against it. But the 2007 law never defined prudent.
The House version of H.4375 says imprudency includes withholding important information from regulators — which House members believe SCE&G did — as well as pretty much everything else SCE&G is accused of doing. The Senate version isn’t tied as closely to SCE&G’s specific actions, which might make it safer in a court challenge. But it looks to me like the utility would have a hard time meeting either definition.
Although the courts will have the final say on how much SCE&G keeps charging us — and might very well set that rate themselves — I don’t think what those decisions will be is predetermined. They depend on what the law is when the lawsuits are heard, what the Public Service Commission does with the rates and its basis for doing whatever it does.
If the Office of Regulatory Staff has time to thoroughly investigate how the project failed, it can give the PSC good information for making its decisions; if not, it might not be able to.
The stronger the constitutional case the Legislature can make for any rules it has rewritten, and the stronger the constitutional case the PSC can make for its decisions, the better the state’s chance of prevailing in court — or at least coming closer than SCE&G to prevailing.
Oh, and that temporary rate reduction? The Senate stripped it out of H.4375, but it’s in another bill (S.954) that’s in the same House-Senate conference committee. Legislators are waiting until after the June 12 primaries to settle on the rate cut, but there’s no reason they can’t agree on the regulatory reforms sooner than that. And there’s every reason they should should pass those reforms.
Even if the extension is approved, the clock is still ticking. And the sooner the Office of Regulatory Staff has the power to force SCE&G, Westinghouse and Bechtel to hand over relevant information, the better its chance of putting together the case that could lead to permanent rate reductions.
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.