By Bill Rauch
There is high political theater complete with pyrotechnics in our state capitol these days … since South Carolina Electric & Gas (SCE&G) announced it won’t be moving forward with the construction of its two new V.C. Sumner nuclear power plant reactors.
Over the past nine years South Carolina’s Public Service Commission (PSC) has approved nine rate increases worth now $1.4 billion so that the utility’s ratepayers could participate directly in the cost of the construction of the two reactors. The average SCE&G customer is now paying an additional $324 a year, or 18 percent, on their utility bill to help raise the money for the construction of these reactors.
They are less than half complete; work has stopped; and their joint owners, SCE&G and Santee Cooper, say they will not continue building them.
Gov. McMaster is looking for someone to buy them, but the early indications are he won’t have much luck. With the surge of wind and solar — and the low cost of oil and natural gas — nuclear is out of fashion. Good for him for trying, but he’s selling bellbottom trousers in a world that wants sundresses.
What SCE&G’s decision says, simply put, is we don’t need the plants. And that would be okay, if the ratepayers who were supposed to be being protected by the state government weren’t so deep in the hole.
Our state senator, Tom Davis, is calling for state-owned Santee Cooper — the owner of the minority stake in the project — to be privatized as a way of preventing future similar fiascos. That’s a good “reduce the size of government” idea, but as a practical political matter it probably won’t happen. And even if it did, it wouldn’t prevent future fiascos. SCE&G, the owner of the majority stake, isn’t a public company — it is a subsidiary unit of SCANA which is listed in the New York Stock Exchange. And that’s who led us into the mess.
Here’s what’s amazing: on the news of SCE&G’s decision to pull the plug on the project SCANA’s share price jumped nearly 10 percent.
Why?
Because investors hadn’t liked the smell of the project for some time, and with it gone they knew it would be the ratepayers and not the shareholders who would be the stooges left holding the bag. In all fairness I must add here that last week everybody who’s anybody in the mess declared they would sue everybody else who’s anybody in the mess. So, as this column goes to press, reacting negatively to the uncertainty that results from leaving matters such as this to the courts, SCANA’s stock price has drifted back to its pre-meltdown news level.
Nonetheless, at this writing it appears there’s a pretty good chance it will be the ratepayers who will end up holding a lot of the bag, by current estimates $2.2 billion more over the next 60 years. For nothing. And that’s just plain wrong.
So what can be done to prevent that tragic outcome, and future similar fiascos?
All signs point to the State Legislature. With power — and they have the power — unfortunately also comes responsibility. For example, the State Legislature appoints the members of the Public Service Commission. I urge readers to go their website (psc,sc.gov) and check out the group who’s protecting our pursestrings. I don’t know any of them. I’m sure they’re all nice and honest and upstanding people. But in this they are in way over their heads. It makes you wonder about those who appointed them, and the process whereby the appointments became inevitable.
Take the chairman. According to his official biography he was a UGA football walk-on who served four years on the Winnsboro town council. And he owned a trucking company there for 22 years. Or consider the commissioner who represents us here along the coast. According to his official bio he’s also associated with the trucking business and he’s active in the Boy Scouts. The vice chairman is a former Mayor of Clinton who was the public address announcer for Presbyterian College football for 30 years.
Where are the killer venture capitalists who shamelessly ask the gut-ripping questions?
We could have used a couple of them here.
Some want to blame the PSC’s staff, The Office of Regulatory Staff, but that’s a cop-out. If the staff can’t do their job, it’s up to the bosses to find some people who can.
Then there’s the 2007 Base Load Review Act (BLRA). Before condemning the PSC commissioners, consider this. The BLRA is a law that the Legislature passed overwhelmingly. Its purported purpose was to “protect ratepayers” but in the light of recent events it had the opposite effect. Basically what it said was when it comes to paying for the construction of the two new reactors SCE&G won’t have to pass the customary “prudence test” before the Public Service Commission. Building the reactors was prudent, the Legislature proclaimed by South Carolina Law in 2007. The Public Service Commission was thus prevented from applying that critical test as the nine rate increases to help pay for the project were proposed. By the Legislature at least one of their hands was tied behind their back.
Too bad.
Wags like to say, “When government tells you they’re coming to help, beware!” The BLRA is a billion dollar example of that.
No one really knows what will happen next.
Surely a way will be found to stop the PSC from having to find that NOT building the reactors is prudent, and thus shifting the $2.2 billion future costs — which are mostly to make bond payments — from the ratepayers to SCANA’s balance sheet.
But SCANA has given $1.5 million in campaign contributions to legislators since 2009 and their best in class lobbyists are working overtime today, so the Legislature must be watched closely on this.
Watch the hands, not the lips.
Bill Rauch was the mayor of Beaufort from 1999-2008. Email Bill at TheRauchReport@gmail.com.
