The state Legislature seems confident in its continued push to strip SCANA Corp. and its subsidiary S.C. Electric & Gas Co. of any ability to collect more money from ratepayers for the failed nuclear project in Fairfield County. They’ve got the backing of the governor and the sentiments of a lot of customers in their corner.
But they may be going too far – so far in fact that the very future of a major utility is endangered. And they’re being told that by some respected voices.
The South Carolina Chamber of Commerce this past week reacted to House approval of the Utility Ratepayer Protection Package, which would end SCE&G’s ability to charge customers for the reactor project.
“We appreciate the House’s efforts to address the debacle that is V.C. Summer. The business community purchases 52 percent of SCE&G’s power and is supportive of cuts for ratepayers, but cannot support this bill in its current form as it may actually create long-term regulatory issues that could drive up costs and slow potential private sector investment. S&P and Moody’s have both clearly communicated concerns over provisions in H.4375 that would retroactively undo a law creating an unstable environment for investment and potentially cost every ratepayer in the state,” said Jack Sanders, CEO of Sonoco and chairman of the state chamber.
Ted Pitts, president and CEO of the chamber, said, “Let’s be clear – this is a tough issue, like no other the state has ever seen, and, to complicate things, it is an election year. The chamber board’s motives for asking the House to slow down and bring in independent, expert advisers is to ensure that we achieve the best, long-term solution for ratepayers. We still believe that the General Assembly will ultimately take the time to get the final version of the bill right.”
The independent South Carolina Policy Council, a frequent critic of the Legislature for not doing enough to save taxpayer dollars, is taking a similar stand. SCPC says the bill goes too far by retroactively amending state law in putting new parameters on the guarantee that lawmakers gave utilities in the 2007 Base Load Review Act, dictating new interim rates for SCE&G and suspending part of the standard appeals law for SCANA regarding the nuclear project.
“While this legislation, if passed, would result in temporarily lowered rates, it would trample the constitution and the balance of power in the process -- a very costly trade-off. Lawmakers guaranteed SCANA's debt through the 2007 BLRA (whether the plant was finished or not), and that guarantee cannot be withdrawn simply because they are feeling the heat for it,” SCPC states.
“Simply put, in this bill lawmakers are choosing their own political welfare over upholding the rule of law and the constitution.
Even SCANA critics such as S.C. Small Business Chamber of Commerce leader Frank Knapp is saying more information is needed to truly determine whether SCANA is in danger of bankruptcy if lawmakers push ahead in trying to strip the company of any ability to further collect for the plants.
“There is no way in the world they could have provided the Public Service Commission with the financial information about SCE&G to make a proper decision,” Knapp told The State newspaper regarding an Office of Regulatory Staff report to the PSC stating that chances of SCANA bankruptcy are not high. The company has disputed that and the PSC has now ordered a second audit.
While such an accounting is being prepared, lawmakers should slow down the pace of their actions aimed at the utility. The General Assembly gave SCE&G the right to charge for the reactors in the way it has, and despite the unpopular nature of continuing costs for the failed project, a total pullback now may yield results that in the end cost ratepayers far more than they are paying.