Plenty of blame to go around in power bill fiasco

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By Scott Graber

It is Friday afternoon and I’m in my small, tastefully furnished office on Carteret Street looking at a stack of bills. The bill that haunts me, that brings a sense of terror, is the one from SCE&G. But first some context.  

I’m a lawyer, a one-man firm, who works in a modest building. That building comes with air-conditioning between March and October. In the last few years I have watched my “light bill” approach $400 almost every month during that eight-month cycle. I’ve paid those bills with a sense of fatalism. Then came the collapse of the Virgil C. Summer Nuclear Plant and the expectation of paying more — $4.9 billion more.  

In order to properly appreciate this fiscal calamity one must understand that SCE&G  proposed to recover its loss by charging every residential customer $19,440.00; or $27 a month for the next 60 years. This proposal came on the heels of nine rate hikes that SCE&G passed on to its customers — roughly $1.7 billion as of July 31, 2017. It also came on the heels of $1.4 billion in dividends paid by SCANA to its shareholders over the past four years. You are, by now, numbed by these numbers, wondering who are the villains in the Shakespearean tragedy?  

Like Shakespeare, the villains are numerous and varied. You may remember that not so long ago — in 2000 — oil and natural gas prices were soaring. In those long gone days nuclear-powered energy plants were thought to be an inexpensive alternative. Then came “fracking,” and the energy world as we know it changed — radically. But in 2007, before the recession and slow-down in 2008, our General Assembly still thought nuclear energy was a good bet. But SCE&G decided to hedge that bet.  

In 2007, SCE&G came to the General Assembly saying it wanted a new financing arrangement that would allow it to increase rates as the project was built. The bill, well-drafted by the utility’s lawyer, proposed to pay for construction of the nuclear plants with a series of rate hikes. This would save on interest but it would also charge the ever-compliant South Carolina “rate-payers” about $27 a month before the first kilowatt was generated. And since 2009 it collected about $2 billion to cover interest costs on the project. But there was something else. There was the provision that said the cost of failure — usually assumed by the shareholders — would be borne by SCE&G’s customers.  

It’s hard to imagine a conversation between the utility and one of our lawmakers but maybe it went something like this:  

SCE&G: “And wait a minute, there was something else I wanted to tell you about the Base Load Review Act….” Legislator: “I”m listening…” SCE&G: “If something goes wrong and the whole project goes into the dumpster…” Legislator: “Not likely but I hear you…” SCE&G:   “Then our customers — the South Carolinians that you represent — will pay us back for whatever we lose.” Legislator: “Oh wow. That’s awesome”  

SCE&G’s proposal passed through our 170-member General Assembly with only six members voting against it. And for a few years nothing much happened on this front other than a series of nine separate rate hikes that eventually accounted for 18 percent of our collective “light bills.” But, apparently, there was some internal skepticism about this project. 

Now we read that SCANA’s internal analysts didn’t believe the costs that were forecast by Westinghouse, the builder, were anywhere close to accurate. On Nov. 21, The State newspaper quoted Ken Browne, a former SCE&G engineer, who said the utility continued to issue positive public statements despite “its extremely poor progress” and “substantial” cost overruns. “Countless admonitions to the consortium from me and others at SCE&G with higher positions up to and including top-level management, only resulting in a corresponding number of empty promises to improve performance and do better next time,” he said. What is worse, these reservations about the project never got to the Public Service Commission.  

On Nov. 25, The State reported “SCANA Settles $2B Lawsuit Over VC Summer Failure.” The piece went on to say that lawyers representing rate-payers had agreed to a $2 billion settlement, but that settlement was conditioned on accepting the Dominion Energy buyout. What the piece did not say was that Dominion Energy was not going to eat or forgive the remaining $2.3 billion in losses but would look to the beleaguered rate-payers. A follow-up piece went on to say certain members of the Legislature were enthusiastic about this “settlement.”  

Here’s the thing: This existential crisis has given us serious doubts about the honesty and legitimacy of the General Assembly. And it is not a good thing to have doubts about the motives and honesty of one’s government — just look at Italy and the widespread belief that their government is illegitimate. Right at the moment Judge John Hayes is ready to point his judicial finger at SCE&G saying that the Base Load Review Act is bogus. Let’s hope he does so before it’s time to turn on the air conditioning.

Scott Graber is a lawyer, novelist, veteran columnist and longtime resident of Port Royal. Email Scott at cscottgraber@gmail.com

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