When businesses spend billions on undelivered, over-budget projects, they normally exit the market, allowing for better services that offer customers better prices.
At least, that’s how things are supposed to work.
Instead, customers of one of the state’s top utilities are on the hook for seven rate hikes from May 2005 to May 2015 to fund energy projects ahead of completion.
Customers will never benefit from one such project. South Carolina Electric and Gas announced Monday it would abandon construction of two nuclear reactors in Jenkinsville after state-owned project co-owner, Santee Cooper quit the project. SCE&G is seeking to pass on to customers the cost of closing out the failed project, though legislative leaders are seeking to block rate hikes.
The company raised rates 19 other times during the ten-year time frame, according to data reported by the state Office of Regulatory Staff.
The utility’s parent, SCANA Corporation on Thursday announced quarterly profits of $121 million, just days after thousands of workers connected to the V.C. Summer project lost their jobs.
Stranger still, the string of rate hikes is set against a backdrop of declining demand for energy.
As upsetting as all this is, it shouldn’t surprise us.
If you’re looking for examples of why the state is terrible at overseeing energy production, stop.
The energy companies and their partnership with primary contractor, Westinghouse Electric Company, which filed for bankruptcy in March, are easy scapegoats. But they’re also a product of the political landscape.
Customers on the grid with no other choice than to patronize SCE&G or Santee Cooper should hold accountable the appointed and elected bureaucrats—now demanding for whoever’s responsible to suffer consequences—who enabled the failure to begin with.
Ironically, lawmakers this week formed a bipartisan Energy Caucus to conceive a reliable energy plan. A decade earlier, the General Assembly approved legislation to let utilities hike rates to fund construction projects ahead of completion, potentially leaving ratepayers on the hook for energy projects they may never benefit from.
South Carolina customers now pay among the highest energy rates in the nation.
The power grid’s setup lends itself to energy monopolies, I admit. But if a monopoly in distribution is inevitable, we should demand that legislators protect customers by breaking up monopolies wherever possible. Let energy companies compete on the production side.
Until utilities are fully subject to market forces, competition in energy production is likely all we can hope for. Meanwhile, customers’ best recourse for the V.C. Summer debacle is in holding accountable the legislature and the legislatively appointed Public Service Commission for acting on behalf of utilities instead of ratepayers.