Cindi Ross Scoppe

Is SCE&G’s nuclear surcharge dead? What a strike-out in federal court tells us

SCE&G lost the first round in its attempt to keep charging SC customers for its abandoned nuclear reactors. But the big battle is still ahead.
SCE&G lost the first round in its attempt to keep charging SC customers for its abandoned nuclear reactors. But the big battle is still ahead.

SCE&G’S MOST creative argument against the temporary rate cut that the Legislature ordered this summer was to call the law that required it a “bill of attainder.” That’s barred by the U.S. Constitution, and has been defined by the Supreme Court as a law that “determines guilt and inflicts punishment upon an identifiable individual without provisions of the protections of a judicial trial.”

U.S. District Judge Michelle Childs agreed that H.4375 does in fact establish the lower rate “without the protections of a judicial trial.”

But, she wrote in denying the utility’s request for a preliminary injunction, it doesn’t meet any of the other parts of that definition.

Yes, the law singles out SCE&G, but that’s OK because SCE&G made itself “a legitimate class of one” by being the only utility that used South Carolina’s notorious Base Load Review Act. The law doesn’t inflict a punishment, she wrote, because SCE&G “does not have a property interest at this time” in the extra money it won’t be able to charge us. The law doesn’t even determine guilt, she wrote, because the Legislature left it to the Public Service Commission to roll back rates by 15 percent. Politically speaking, that’s a distinction without a difference, but in court, that distinction, technical though it may be, makes all the difference in the world.

So SCE&G complaining that the Legislature didn’t provide it the “protections of a judicial trial” is sort of like me complaining that I wasn’t given a trial. After I wasn’t charged with a crime. Which didn’t include a penalty anyway.

The “bill of attainder” claim was one of three ways SCE&G claimed that the law violated its constitutional rights; the judge flatly rejected the other two. And even if she had been convinced on one of the three approaches, SCE&G still would have had to meet three other tests to get an injunction; it met zero. Which is to say that the ruling was pretty much a body blow to the utility.

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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

It’s been a year since SCE&G pulled the plug. Here’s what to expect in Year 2

Customers want their money back. So do stockholders. A look at the 15 suits vs SCE&G

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

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Of course, it’s not supposed to be easy to convince a judge to block the enforcement of a law without a trial.

Still, unless the Fourth Circuit Court of Appeals reverses her — which certainly isn’t impossible and could happen as soon as today — Judge Childs’ ruling all but guarantees that this month’s temporary rate cut will stay in effect until December. That’s when the PSC must rule on the request by SCANA Corp. and Dominion to merge and charge us an additional $5 billion over the next 20 years for the nuclear reactors that SCE&G abandoned mid-construction.

We can now turn our attention away from the sideshow of our August through December power bills and focus instead on the real fight: how much we have to pay for the unfinished reactors for the next 20 years.

Even if the court were so inclined, it would be almost impossible to rule on the merits of the lawsuit before then. Federal courts simply don’t move that fast.

That means we can now turn our attention away from the sideshow of our August through December power bills and focus instead on the real fight: how much we will have to pay for the unfinished reactors during that 20-year “abandonment” phase of construction. The Public Service Commission will decide whether and how much SCE&G can charge based on that new law that SCE&G is challenging in court. Expect SCE&G to amend its lawsuit after the PSC rules, to incorporate specific objections to that order.

It’s tricky to predict how a court will rule, and, again, the fact that SCE&G didn’t get the law temporarily blocked does not in itself tell us anything about its chances on the merits of this lawsuit. Unless it is proven that SCANA executives engaged in fraud, I still think the most likely outcome is that SCE&G will be able to charge us some but not all that it wants.

Judge Childs’ initial look at SCE&G’s arguments seems to suggest that it’ll be tough to prove that the new law violates the utility’s constitutional rights.

But Judge Childs’ initial look at SCE&G’s arguments seems to suggest that it’ll be tough to prove that the new law violates the utility’s constitutional rights. And her analysis of the pre-July law raises questions, again, about state regulators.

As she explains it, the law allowed SCE&G to charge us for construction of the nuclear plants — but only as long as they were “constructed or being constructed.” That is, only through July 31, 2017.

Another part of the law allows SCE&G to seek permission to charge us for the costs that remain after it abandoned construction, but it’s up to the PSC to allow or deny those charges, under a very different set of rules. That’s one of the things it’s supposed to do in December.

Her explanation makes me wonder why the PSC allowed SCE&G to keep charging us $37 million every month from September through July, when by her reading it didn’t have to.

Since Aug. 1, 2017, though, we’ve been in a sort of no-man’s land, where “SCE&G is no longer performing the conditions necessary to retain any alleged property right” under the Base Load Review Act, “likely extinguishing any entitlement SCE&G could claim” under that law. The Office of Regulatory Staff and the attorney general’s office have made essentially that same point, but the judge’s order explains it much more clearly.

Her explanation makes me wonder why the PSC allowed SCE&G to keep charging us $37 million every month from September through July, when by her reading it didn’t have to. And actually, why the PSC is allowing the utility to charge us $7 million a month through the end of the year.

It also makes me wonder how the company could have filed a lawsuit that was so thoroughly off the mark. Which raises the question of whether the Public Service Commission will allow SCE&G to charge ratepayers to cover the cost of that lawsuit — and those that come after it — as its recent decision in the Carolina Water case suggests it might.

More information

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

Legislators cut our SCE&G rates. But they ignored all the other VC Summer problems

The PSC let a polluter bill customers for its legal fees. What would it give SCE&G?

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

McMaster couldn’t have prevented our nuclear mess. Future AGs ought to be able to

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

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

Santee Cooper is out of control. But that’s not a reason to sell it

Did South Carolina’s own ‘don’t ask, don’t tell’ law make the nuclear fiasco worse?

You’re not going to stop paying nuclear surcharge, even if House bill becomes law

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 donations secured SCE&G the means to squander billions.

How much worse was the original Bechtel nuclear report?

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

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

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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