South Carolina lawmakers aim to reform utility regulatory model in wake of V.C. Summer disaster

Dive Brief:

Legislation drafted in South Carolina would punish the utilities involved in the failed V.C. Summer nuclear project and reform the state electric power regulatory structure.
One of the six proposed bills, House Bill (H.B.) 4375, would amend the Base Load Review Act to do away with rate increases tied to the fail project. Another bill, H.B. 4380, would authorize the Public Service Commission to require South Carolina Electric & Gas’ parent company, SCANA, to give customers a refund.
Another bill, H.B. 4376, would reform state-owned utility Santee Cooper, SCE&G’s partner in the Summer project, and subjecting it to PSC oversight and barring abandonment costs from being added to new rates. The South Carolina General Assembly will take up the bills when it reconvenes in January.

Dive Insight:

Among the many repercussions from the decision to abandon the Summer nuclear project was an outcry from South Carolina legislators who in August called for a special session to look into the events leading to the abandonment. Santee Cooper and SCANA pulled out of the embattled project months after primary contractor Westinghouse Electric Co. filed for bankruptcy protection in March.

Now House Speaker Jay Lucas (R) has filed the legislation that would reform the state power regulations and restrict the ability of the state’s utilities, including state-owned Santee Cooper, from charging customers for the cost overruns associated with the failed nuclear project.

According to South Carolina’s Office of Regulatory Staff, SCE&G is collecting $37 million per month from customers for the nuclear plant. One of the bills filed by Lucas would authorize the PSC to require SCANA to give customers a refund. SCANA will likely have to absorb more than $200 million in recovery costs for Summer, instead of collecting it from ratepayers, according to earlier reports.

The legislation would also allow the PSC to order refunds for money customers have already paid for the nuclear project, totaling about $1.8 billion, if SCE&G is found to have misrepresented the project of been guilty of “poor management.” A 2016 audit revealed the utilities knew of the construction issues plaguing Summer well before they pulled out of it.

“In recent months, it has become overwhelmingly evident that increased oversight and necessary reforms must be made to several state agencies in order to prevent a fiasco of this magnitude from occurring again,” Lucas said in a statement.

Both CEOs of the utilities have retired or resigned in the wake of the Summer debacle. Gov. Henry McMaster also called for selling Santee Cooper to cover some of the debt from the construction. Last week, NextEra Energy emerged as a leading potential buyer of of the public utility.