“Relief” Bill Leaves Ratepayers on the Hook for Nuclear Project
A bill – S.954 – targeting current and future utility rates has passed both the House and the Senate as slightly different versions, and is now in conference committee. Here are the key takeaways:
- Does not permanently eliminate V.C. Summer rate hikes – it only lifts them temporarily, for a range of one to five months.
- Sets the date range for the Public Service Commission (PSC)’s ruling on who pays for the abandoned nuclear project and proposed SCANA/Dominion merger: PSC could not rule on either until November 1, 2018, and the decision must be issued by December 21, 2018.
- Mandates that private companies (SCE&G and Duke Energy) give up federal tax savings.
- Directs regulators, by law, to issue specific rulings.
Below is a more detailed breakdown of the various elements, and the differences in the House and Senate versions. These differences are currently being discussed in conference committee. May 10 (tomorrow) is the final day of the legislative session, but the conference committee can continue to work on a final version of the bill even beyond session. Lawmakers have provided for multiple special sessions throughout the summer to consider conference reports, as well as nuclear-related bills.
What the bills appear to do:
- Temporarily cut the portion of SC&G customers’ bills that go toward the V.C. Summer construction project
- The House version lifts all the rate hikes imposed for the nuclear project under the Base Load Review Act. It gives relief to customers until the PSC ruling and any subsequent court processes and appeals are resolved.
- The Senate version lifts the rate hikes imposed after 2011, leaving 2009-2010 rate hike(s) intact. It gives relief for 30 days, and requires a hearing to be held to ensure relief is effective.
- Give the PSC time to gather and consider the facts and merits of the case
- Set the dates for the PSC process to determine whether SCANA is responsible for all V.C. Summer debt or whether some (or all) should still be charged to SCE&G’s customers, and whether to approve or reject the proposed Dominion/SCANA merger.
- Force SCANA to pass its savings from the federal tax cut on to customers.
What the bills would actually do:
- Provide between one and five months of rate reduction, depending on which version passes
- House bill lifts all V.C. Summer rate hikes through December 21 (or when the PSC rules), assuming no further appeals. If the PSC approves the Dominion merger, the new rate will be whatever Dominion/SCANA agree upon and the PSC approves.
- Senate bill lifts post-2011 V.C. Summer rate hikes, but mandates a hearing 30 days after the rate reduction. PSC can adjust the temporary rate to protect SCANA from insolvency.
- Direct regulators to take specific action – a dangerous violation of separation of powers, since regulatory bodies belong to the executive branch.
- Mandate private companies to give up their federal tax relief savings for the benefit of customers. While this may sound positive, passing laws to dictate the disposal of private companies’ assets is an improper overreach of legislative authority.
Note: The V.C. Summer costs are the remaining $5 billion of debt from the abandoned construction project. This debt is currently guaranteed by the Base Load Review Act, which forces ratepayers to cover the debt even if the project is abandoned. This debt cannot be legislated away and must be settled somehow. Currently, roughly 18% of ratepayers’ bills go toward the V.C. Summer project. According to the terms of the proposed Dominion/SCANA merger, ratepayers’ bills would be cut by only 5%.
From day one of the nuclear fiasco, lawmakers have guarded their power over the energy regulatory structure. This bill simply underscores the fact that the PSC is not and never has been in charge of the process. The General Assembly – and legislative leadership in particular – are accountable both for the legislation that led to the V.C. Summer debacle, and for the oversight structure and process at every stage.
Regardless of which version of S.954 is passed out of conference committee, ratepayers will remain liable for the V.C. Summer debt.