The public and the General Assembly are filled with righteous indignation toward two S. C. utilities for hiking rates over nine years to fund the construction of two Fairfield County nuclear reactors they abruptly abandoned in July.
The project partners, South Carolina Electric and Gas and state-owned Santee Cooper have poured roughly $9 billion into the project, billing customers $2.2 billion in rate hikes to help fund it.
“Sometimes we just have to stand up and say, “we made a mistake,’ ” Sen. Nikki Setzler said to the partners at a Monday hearing. “Neither one of you has ever said we made a mistake of any kind,” said the West Columbia Democrat, who co-chairs a special Senate committee investigating the failure. The House has formed a similar committee, which met Friday.
Setzler’s statement captures the tone of the hearings to grill the partners. But these words are also fitting for the officials who enabled a system that would insulate the utilities against risk if the project failed.
In fact, SCANA’s CEO, Kevin Marsh has stopped far short of blaming the General Assembly for its role in the project’s demise. He told the House committee on Friday he didn’t think construction would have occurred if not for the 2007 Base Load Review Act, which helped attract investors needed to build the reactors. SCANA is SCE&G’s parent company.
Under the law, utilities may hike rates to fund projects, whether they reach completion or not.
Some utility experts think ratepayers may have a case to recoup losses–or to prevent future rate hikes tied to the project–under the law, which has in place safeguards for ratepayers, because the utilities failed to deliver what they promised in exchange for rate hikes.
But the law lets utilities recover so-called prudently incurred costs, while shielding customers of investor-owned utilities from shouldering imprudent costs.
Customers at SCE&G and Santee Cooper have funded the interest on financing through 14 rate hikes combined since 2009.
“We accept the fact that it’s our problem to deal with now,” Marsh said Friday. “We can talk a long time about who you want to put the blame on.”
SCANA officials have maintained the partners acted prudently, based on assumptions at any given time, saying they think the project would still be moving forward if their lead contractor, Westinghouse Electric Company had not declared bankruptcy earlier this year. The contractor failed to meets its commitments to the partners, they said.
Prudency, according to the BLRA, hinges on “the information known to the utility at the time and considering the other alternatives available to the utility for supplying its generation needs.”
The two committees, in part, are aiming to uncover what the partners knew and when.
A 2016 report by project management firm, Bechtel Corporation, revealed construction was not feasible unless the partners addressed the firm’s findings. Santee Cooper released the report to Gov. Henry McMaster earlier this month after he demanded it.
The report was prepared in anticipation of potential litigation, SCANA officials said. The partners, who agreed with and worked to correct many of the findings, said they knew about problems with the project before Bechtel’s review.
Bechtel alerted the partners to its findings in October of 2015 before delivering a formal report in 2016.