State: South Carolina law allowing utility rate hikes ‘constitutionally suspect’

COLUMBIA, S.C. — A state law used by utilities to raise customers’ rates to fund a now-defunct nuclear project is “constitutionally suspect,” according to an opinion released Tuesday by one of South Carolina’s top prosecutors, whose office has asked for a criminal investigation into the failure.

 

In what’s known as an Attorney General’s Opinion that was released by Attorney General Alan Wilson’s office, Solicitor General Bob Cook wrote that the Base Load Review Act “fails to strike the constitutionally required balance between investors and ratepayers” and also “denies ratepayers procedural due process.”

A bipartisan trio of lawmakers recently asked prosecutors to study the 2007 law, which allows utilities to collect money from customers to finance a project before it generates power. The law has come under intense scrutiny by both ratepayers and lawmakers who say it was used to recklessly increase customers’ bills for a tenuous project.

South Carolina Electric & Gas Co. used the law to repeatedly lobby the Public Service Commission for rate increases to fund the construction of two nuclear reactors at V.C. Summer. After spending nearly $10 billion, SCE&G and state-owned utility Santee Cooper, its partner in the project, scuttled it earlier this summer following the bankruptcy of lead contractor Westinghouse, a decision that left nearly 6,000 people jobless.

By that point, the companies had charged more than $2 billion to ratepayers. Santee Cooper has increased rates five times to pay for the escalating costs, but the Public Service Commission has no authority over the state-owned utility. The shuttered project already accounts for 18 percent of SCE&G’s residential electricity bills and more than 8 percent of Santee Cooper’s.

In the 57-page opinion, Cook wrote that the law “further rewards abandonment of nuclear projects such that ratepayers must pay the utility’s costs plus a substantial rate of return for investors without receiving any service from the plants.”

Attorney general’s opinions carry no legal heft of their own but generally represent the position of the state. The state Supreme Court rejected conservationists’ 2014 challenge to the law, ruling that it allowed SCE&G to raise customers’ rates to fund the reactors. Representatives for both utilities didn’t immediately respond to emailed requests for comment on the release.

The makeup of the court has since changed, so it’s unknown of the current justices would rule the same way.

Both Wilson’s office and top state lawmakers, including House Speaker Jay Lucas, have asked state police to probe possible criminality on the part of SCE&G and parent company SCANA in the project’s failure. Federal authorities have also subpoenaed documents from both utilities, and a half-dozen lawsuits have been filed in state and federal court.

 

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