Cindi Ross Scoppe

Is this the best lawmakers could do to rein in SCE&G’s nuclear surcharge? Maybe

YOU KNOW of course that the Legislature cut SCE&G customers’ power bills by 15 percent this week, a reduction that both the governor and his Democratic challenger unwisely opposed because they were holding out for a full 18 percent cut. Which is to say that they were willing to accept nothing rather than settle for 83 percent of the full loaf that they fantasize the courts would allow.

But while that cut will slash $30 million of the $37 million we’re paying every month for nuclear reactors that will never generate any power, and send an important official signal to the legislatively appointed Public Service Commissioners, it’s the least consequential part of the bills lawmakers passed on Wednesday and enacted on Thursday over Gov. Henry McMaster’s veto. That’s because it’s temporary.

Legislators are convinced that SCE&G parent SCANA knew by 2011 that its plan to build two new reactors at the V.C. Summer nuclear plant was doomed but hid that from regulators. So H.4375 orders the Public Service Commission to rescind the rate increases it approved since 2011 and leave in place only the 3 percent nuclear surcharge the commission approved earlier.

That lower rate, retroactive to April 1, expires when the PSC rules on a rate request from SCE&G and would-be purchaser Dominion Energy. Which S.954 orders the commission to do by Dec. 21.

Lawmakers adopted this convoluted two-step in an effort to find the constitutional sweet spot between ratepayers’ right not to be forced to pay for a service they won’t receive and the utility’s right to be reimbursed for expenditures state law allowed and encouraged.

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Cindi Ross Scoppe


SC nuclear debacle, by the numbers

14 years and counting: key dates in creating, recovering from the SC nuclear debacle

$9 billion and two abandoned reactors later, who’s the victim here? SCE&G says it is

We’re bankrolling SCANA dividends with our payments for abandoned nuclear reactors

Three ways the Dominion-SCE&G deal could fall apart

The constitutional conflict between SCE&G and ratepayers


It’s nice that the Legislature cut our power bills by a total of $260 million, since it’s grossly unfair to have to pay anything more — and doubly so since SCANA has been using our nuclear payments to reward its stockholders. But that’s a small fraction of the $3.8 billion that even Dominion says it wants to charge us for the unfinished reactors. (It’s also clearly not a hit that will drive SCANA into bankruptcy court if Dominion walks away: SCANA was able to bank an annualized $280 million Thursday simply by slashing its second-quarter dividend by 80 percent.)

Far more significant is the Dec. 21 deadline for a PSC decision. Until the Legislature changed the law this week, Dominion’s buyout proposal stood to be automatically approved on July 12 if the PSC had not disapproved it — something the PSC was in no position to do. Dominion’s proposal does include immediate rebates worth $1,000 to the average residential customer, but it also includes 20 more years of nuclear surcharges.

Giving the PSC an extra five months to decide how much we pay for the abandoned reactors over the next 10 or 20 or 50 years increases the odds that commissioners will reach a pro-consumer decision that can stand up against SCANA’s court challenge. So do provisions in H.4375 that remove the Office of Regulatory Staff’s mandate to protect SCE&G’s financial interests and give it the power to subpoena SCE&G records, which it hopes will prove that the utility misled regulators into approving its nuclear rate increases.

The other provision of H.4375 that’s much more significant than the temporary rate cut is a definition of “prudence,” a word that should have protected ratepayers from excessive charges but instead acted as a “spend more, profit more” incentive for SCE&G to keep building even as expenses spiraled out of control.

The 2007 Base Load Review Act meant that once the PSC decided it was “prudent” for SCE&G and Santee Cooper to build the reactors, it couldn’t turn down any rate hikes unless opponents proved that SCE&G made “imprudent” decisions. Worse, it said SCE&G was entitled to its rate increases if it didn’t realize its contractors made imprudent decisions. That was an incentive to provide insufficient oversight of the contractors’ work, and SCE&G officials have blamed the project’s failure on decisions by prime contractor Westinghouse that seem clearly to meet any definition of imprudent.

The 2007 law didn’t define “prudent” or “imprudent,” but on Wednesday, the Legislature did. It said imprudence can mean a “lack of caution, care, or diligence” or “negligence, carelessness, or recklessness.” The definition also makes SCE&G responsible for the imprudent actions of its contractors. Unless they’re overturned by the courts, those changes should allow the PSC to reject any efforts by the utility to collect more than a small fraction of the remaining costs for the failed project.

Another significant change: Under current law, if the PSC or a court orders SCE&G to lower its rates, SCE&G can keep charging those rates while it appeals the decision. The bill passed Wednesday says the lower rate applies during the appeals. Since SCE&G’s expected appeals could drag on for years, this provision could cost the utility hundreds of millions of dollars. At least.

Senate Republican Leader Shane Massey told his colleagues on Wednesday that negotiators had deliberately tried to ignore Dominion’s threat to walk away if the Legislature cut the nuclear surcharge and SCANA’s threat to file for bankruptcy if Dominion walks away. Instead, they tried to go as far as the courts would allow toward eliminating the nuclear surcharge. I think they probably succeeded at that.

What I hope is that they gambled correctly when they assumed that the courts will in fact rule large nuclear surcharges unconstitutional — and that SCANA won’t file for bankruptcy if Dominion walks away.

More information

Here are some other pieces I’ve written about this that you might find helpful:

Here’s what could happen if the Legislature doesn’t end the nuclear surcharge

It gets harder to slash SCE&G’s nuclear surcharge every day this bill doesn’t pass

Why Santee Cooper’s customers pay a way lower nuclear surcharge than SCE&G’s

Ratepayers sued the state, and the attorney general’s office is helping them

Our politicians are spreading false hope about the nuclear mess. Don’t listen.

Legislators’ micromanagement limits fix to regulatory system behind nuclear debacle

Why legislators shouldn’t be allowed to accept donations, jobs from utilities

What else we learned from that SCE&G bankruptcy report

How awful would it really be if SCE&G went bankrupt?

4 changes the Legislature needs to make after the $9 billion nuclear debacle

Is this the best deal SCE&G customers can get? Why finding out could cost us

Still want to run government like a business? That’s insane

Buying the benefit of the doubt: How donations secured SCE&G the means to squander billions.

How much worse was the original Bechtel nuclear report?

Santee Cooper’s role in SC nuclear debacle looks worse by the day

How ‘waste not, want not’ became ‘spend more, profit more’

SCE&G nuclear fiasco: It’s complicated. Here are some explanations.

SCE&G law could cost you more than you imagine

Ms. Scoppe writes editorials and columns for The State. Reach her at or (803) 771-8571 or follow her on Twitter or like her on Facebook @CindiScoppe.