Atlanta Business Chronicle

Tuesday, 26 September, 2017

Charging consumers for failed S.C. nuke plant 'constitutionally suspect' official says

By Mark Meltzer

South Carolina’s solicitor general says a law that required consumers to pay in advance for a failed nuclear reactor is “constitutionally suspect.”

The law is similar to a Georgia law that has allowed <>Georgia Power Co. to charge its ratepayers since 2009 for the nuclear expansion at Plant Vogtle, a project that is way behind schedule and over budget, and whose future remains in doubt.

Solicitor General Robert D. Cook said the state constitution requires that the public’s interest be protected in the state’s regulation of it utilities.

Read his opinion <>here.

“As one authority has written, ‘[public utility regulation does not exist for the benefit of the utility companies; Its purpose is to protect consumers from monopoly power,’ ” Cooke wrote in a letter to four state legislators who sought his legal opinion. “Not only is the BLRA [Base Load Review Act] skewed strongly against ratepayers overall, in conflict with Art. IX, §l’s purpose, but the Act’s abandonment provision, which discards the bedrock principle of ‘used and useful’ disregards the ‘public interest’ as defined by Permian Basin, DePass and the other authorities, referenced above. It cannot be in the ‘public interest’ to charge ratepayers for capital costs of an unfinished and abandoned plant. It cannot be in the ‘public interest’ to charge customers in order to pay stockholders an exorbitant rate of return. It is not in the ‘public interest’ to increase the power bills of consumers who receive nothing in return, essentially charging them twice. Thus, we believe that Art. IX, §1 renders the abandonment provision, as well as the other BLRA provisions discussed herein, to be constitutionally suspect.”

The boards of South Carolina Electric & Gas Co. (SCE&G) and Santee Cooper voted at the end of July to cease construction at the V.C. Summer Nuclear Station in Jenkinsville, S.C., and seek approval for abandoning the project from the South Carolina Public Service Commission.

The companies cited a new analysis of the costs of completing the project, uncertainty regarding the continuing availability of federal production tax credits and the amount of guaranty settlement payments forthcoming from Toshiba Corp., the Japan-based parent of <>Westinghouse Electric Co., the project’s prime contractor, which filed for bankruptcy earlier this year.

The South Carolina project used the same next-generation technology as <>Georgia Power Co. is using at Plant Vogtle.

Atlanta-based Southern Co. and its utility partners have decided to push forward with completion of the nuclear expansion at Plant Vogtle rather than give up on what has ballooned into a $25.2 billion project.

The Georgia General Assembly in 2009 gave Georgia Power the right to collect a surcharge from ratepayers to help fund the Vogtle expansion, saying it would keep costs lower to pay for the project in that way. Georgia Power customers pay about $100 a year to help fund the Plant Vogtle expansion.

Originally due to be completed in 2016 and 2017, the first of the two new reactors at Plant Vogtle now is due to go into service in 2021, followed by the second a year later.

The South Carolina legislators asked for the state’s legal opinion on their 2007 law.

“The undersigned have been reviewing the Base Load Review Act of 2007 in light of the recent problems that have occurred with V.C. Summer Nuclear Plant. In reviewing this Act, we have concerns about the overall constitutionality of the same. Please provide us with an Attorney General Opinion as to whether this Act is in accordance with the Constitution of the State of South Carolina.”

A lawsuit filed Aug. 29 alleged that South Carolina Electric & Gas Co. unfairly charged customers up to $1 billion for the failed nuclear expansion project.