COLUMBIA — A South Carolina judge is expected to overturn the controversial law that put electricity customers on the hook for a failed nuclear project, a move that would upend a high-stakes fight over who pays for one of the biggest financial fiascoes in state history and could trigger $2 billion in refunds for ratepayers.
The decision would clear the way for South Carolina Electric & Gas’ roughly 720,000 ratepayers to stop paying for the nuclear project, which was called off last year after massive budget overruns and mounting delays.
It could also open the door for lawyers to argue that Cayce-based SCE&G should refund ratepayers for the more than $2 billion they've already put into the project over the past decade.
Judge John C. Hayes III is said to be on the verge of ruling that the Base Load Review Act — the law that allowed SCE&G to charge its customers for a pair of unfinished nuclear reactors — is unconstitutional. His plans were confirmed by two people familiar with his thinking.
Having to pay refunds would set off a financial domino effect that the utility has said could push it toward insolvency.
The prospect sent shares of SCE&G’s parent company, SCANA Corp., to their biggest loss in more than three decades on Wall Street. SCANA stock plunged 10.8 percent, wiping out more than $620 million in value.
SCE&G said in a statement that Hayes had asked its opponents to write up drafts for a court order, and he instructed them to include language declaring the law unconstitutional. The power company has until next week to respond to their proposals.
"The judge has indicated ... that no final decision has been reached at this time, and the aforementioned issues will remain unresolved until he signs an order in the matter," the utility said in a statement.
SCE&G is on the hook for just over half of the unfinished reactors at the V.C. Summer nuclear power plant, which cost $9 billion in all. It would also deal a blow to the utility’s safety net: a sale to Virginia-based Dominion Energy. A financial setback could scuttle the $14.6 billion deal.
SCE&G has already been forced to temporarily cut most of the nuclear project’s costs from its electricity rates. The nuclear project had accounted for nearly a fifth of customers' power bills, but most of those charges were rolled back by the state Legislature through the end of the year.
Lawmakers had been gunning for a permanent rate cut but scaled back their ambitions to leave the more complicated legal questions to utility regulators and the courts.
Hayes has asked lawyers challenging the Base Load Review Act’s constitutionality to draft an order making the legal case against it. Those orders, which are being written by the state Attorney General’s office and private law firms challenging SCE&G, have not been reviewed by the judge, and he could still revise the ruling before it's finished.
Hayes’ thinking was also reported by the Charlotte Business Journal, which quoted state Sen. Brad Hutto as saying that the law would be overturned. Hutto, an Orangeburg Democrat who is representing the state’s electric cooperatives in the ongoing litigation, couldn’t be reached for comment Monday.
The Attorney General’s office has been raising questions about the Base Load Review Act’s legality since shortly after the nuclear project was called off. In a previous opinion, it said utility customers shouldn’t be charged for a power plant that isn’t “used and useful.”
Thad Moore contributed to this report.