Cindi Ross Scoppe

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

THE LEGISLATURE gave several reasons for temporarily reducing our power bills and retroactively changing the law that encouraged SCE&G to spend excessively on its now-abandoned nuclear construction project. Among them was that while parent company SCANA “has taken steps to reduce its own costs related to the abandoned Project … its customers’ rates continue to reflect (all) of authorized Project costs prior to abandonment.”

Another was that “recognition of SCANA’s legal rights and remedies does not require that SCANA customers continue to pay one hundred percent of the rates previously authorized by the (Public Service) Commission when the Project was expected, upon completion, to provide valuable services to the customers.”

And while the Legislature wants people to be able to rely upon incentives it provides, “this reliance should be predicated upon a good faith effort to comply with all terms of any incentives so that noncompliance or misrepresentation in order to obtain offered incentives” does not unfairly cost the public. (Lawmakers determined that SCANA was not complying with the terms when it kept pouring money into two nuclear reactors even as it became increasingly apparent that the project could not survive.)

Lawmakers knew SCE&G would sue over the legislation they passed last month in hopes of paving the way for permanently reducing or eliminating the $37-million-a-month nuclear surcharge that SCE&G continues to collect more than 11 months after it abandoned the project. They also knew that court decisions can turn on legislative intent, and so they spelled out all that and more in a series of “whereas” clauses in one of the measures.

It might have been a brilliant stroke.

Or a humongous miscalculation.

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Cindi Ross Scoppe

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SC nuclear debacle, by the numbers

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

That 15% SCE&G rate cut is temporary. How lawmakers hope to make it permanent

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

How donations secured SCE&G the means to squander billions

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In its lawsuit filed the day after H.4375 and S.954 became law, SCE&G singled out those clauses — there were several more it didn’t mention — to help make its case that legislators were out to get the utility. In the utility’s words, “South Carolina Politicians Express(ed) a Desire to Make SCE&G Pay for the Abandonment.”

As that charge foreshadows, the lawsuit reeks of arrogance and entitlement.

It’s hard to read the complaint that SCE&G “has become a focus of a political and media firestorm as a result of exercising its rights” without rubbing your thumb and forefinger together to replicate the world’s smallest violin playing the world’s saddest song.

The charge that the Legislature was “singling out and severely punishing SCE&G for its decision to abandon construction of the nuclear facilities” comes off as disingenuous. Since the “punishment” wasn’t for abandoning the project but for, among other things, refusing to alert regulators that a company SCANA hired had concluded that the project was out of control because SCANA was not doing its job of providing oversight.

Particularly galling is the complaint that by giving the PSC authority to reinstate part of the nuclear surcharge if necessary to keep SCANA solvent — but only to “the lowest possible rate within the zone of reasonableness” — the Legislature is ordering regulators to “confiscate as much of SCE&G’s legally-promised rates as it can.” Which I suppose is one way of reading that.

The other way is that the Legislature ordered the commission not to raise rates any more than it must to be “reasonable.” Which, it seems to me, should be the rule any time the commission approves utility rate increases. For anyone.

But arrogance and entitlement aren’t illegal, and they don’t mean SCE&G’s complaint is without merit. Set all that aside, and you find that the central argument is that the Legislature acted as a court of law — as prosecutor, judge and jury — finding the utility guilty and imposing sentence without affording the utility the right to defend itself.

The lawsuit argues that “lawmakers weighed information presented to legislative committees without the benefit of rules of evidence, cross-examination, and procedural rules applicable to an evidentiary proceeding.” The Legislature then “determined that SCANA was imprudent after 2010, and imposed the ACT as punishment.” This, it argues, violated the U.S. Constitution’s ban on states passing a “bill of attainder,” which as the lawsuit notes is “a law that legislatively determines guilt and inflicts punishment upon an individual without provision of the protections of a judicial trial.”

This would be a fascinating question even if there weren’t so much riding on it.

I feel sure that if the Legislature had not acted, a court would have reduced SCE&G’s rates — maybe more than the Legislature did, maybe less. But that would have been done with “the protections of a judicial trial.” The question is whether it was OK for the Legislature to do what a court would have done, but without providing those protections.

If SCE&G were a person, convicted and sentenced by the Legislature for allegations that never saw the inside of a courtroom, the legislation clearly would be unconstitutional. And repulsive to the very idea of the rule of law. But it’s not clear that those protections apply to regulated monopolies.

As Solicitor General Bob Cook reminded lawmakers in a May attorney general’s opinion, the U.S. Supreme Court has ruled that state legislatures are “competent bodies to set utility rates” and that states are “free to decide what rate setting methodology best meets their needs in balancing the interests of the utility and the public.”

Since the U.S. Supreme Court has gone so far as to allow legislatures to retroactively reduce rates without any alleged wrongdoing, it seems bizarre to imagine that a court would be put off by the Legislature being motivated by apparent if unproven bad acts.

More information

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

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

Could the fate of the nuclear surcharge come down to a 3.5 x 7 piece of paper?

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

Legislators’ micromanagement limits fix to regulatory system

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

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

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

How much worse was the original Bechtel nuclear report?

Where to hide nuclear secrets? Behind a lawyer, of course

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 cscoppe@thestate.com or (803) 771-8571 or follow her on Twitter or like her on Facebook @CindiScoppe.

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