COLUMBIA — After months of delays, South Carolina lawmakers agreed on a plan Wednesday that would temporarily slash S.C. Electric & Gas customers' power bills.
The deal ends a drawn-out debate over charges for abandoned nuclear reactors and likely throws the state into a legal battle with a utility company that once held immense influence inside the Statehouse.
The agreement, which is still a couple of steps from becoming law, would temporarily eliminate most of the $37 million per month that SCE&G charges ratepayers for its unfinished V.C. Summer nuclear project in Fairfield County.
It would also strengthen South Carolina's existing utility watchdog agency, create a new consumer advocate to represent customers in utility cases and prevent future projects from using the 2007 law that enabled the $9 billion project in the first place. That law stuck electric customers with the financial risk of building the now-abandoned reactors.
SCE&G ratepayers' bills would drop by nearly 15 percent through the end of the year under the agreement — a savings of about $22 a month for the typical home. That covers most, but not all, of the money that customers hand over to the utility each month for the project.
Rep. Peter McCoy, a Charleston Republican who led a committee that investigated the nuclear project, said he wishes the legislative process would have worked more quickly on cutting SCE&G's rates, but he supports what came out of the House and Senate's collaboration.
"The goal is to provide the quickest relief we can to the ratepayers," McCoy said. "We've all been paying this nuclear premium, which you can make an argument was born from fraudulent intent."
But the deal struck by House and Senate negotiators does not resolve the nuclear question for good.
The final decision on SCE&G's rates is left to the state's Public Service Commission. Lawmakers are giving the commission's seven members until December to decide whether SCE&G's ratepayers or its shareholders will pay for the billions of dollars of debt it accumulated on the project.
Some lawmakers believe that the Legislature's insistence on cutting out the nuclear charges baked into SCE&G power bills will send a strong signal to the regulators, whom they hand-pick.
"If the Public Service Commission wants to use some of our rationale in their hearing, that's great. We did a lot of work in order to get at that," said Senate Majority Leader Shane Massey, R-Edgefield. "But what we were trying to do is justify what our decision is."
What's more, the legislative compromise also tries to make it easier for state officials to show that SCE&G, and its parent company, SCANA Corp., didn't properly manage the massive nuclear project over the past nine years.
The panel of lawmakers who hashed out the deal moved to narrow the legal definition of what is "prudent." That's important, because under South Carolina law, customers only have to pay for SCE&G's construction bill if the utility acted responsibly as it racked up the expenses.
The plan is not yet law. The House and the Senate overwhelmingly approved the measure on Wednesday, but the final bill will need to clear an impending veto by Gov. Henry McMaster.
McMaster, who secured the Republican nomination for governor Tuesday, said he wouldn't sign legislation unless it eliminated all of SCE&G's nuclear charges, which currently make up a full 18 percent of ratepayers' bills.
"The governor has said from the beginning of this process that it is unacceptable for any South Carolinian to pay another dime. He believes that today as well," Brian Symmes, the governor's spokesperson, said immediately after the deal was reached. "He will absolutely veto anything that comes to his desk that doesn't cut the full nuclear surcharge."
Both chambers of the Legislature passed the measure by a veto-proof margin. Rep. James Smith, D-Columbia, and Rep. Mandy Powers Norrell, D-Lancaster, both voted against the bill. They are running together on the Democratic ticket as governor and lieutenant governor in the general election in November.
The compromise also raises new questions about SCE&G's future. Virginia-based Dominion Energy is trying to buy SCANA in a $14.6 billion deal, and the Legislature's proposal would likely give it legal cover to walk away if it becomes law.
In a statement, Dominion chief executive Thomas Farrell said lawmakers were "playing a high-stakes game" and "risking" the possibility of losing his company's offer, which includes a partial rate reduction and a refund of most of the $2 billion ratepayers have into the project so far.
His statement stopped short of saying the company would abandon its plans to buy SCANA.
SCANA's stock fell all the same, as investors who bet on a legislative stalemate backed down. Shares fell 4.4 percent to about $36.80 a share, effectively wiping out $244 million in the company's value.
If the rate cut is enacted, SCE&G could still throw a wrench into lawmakers' plans. The utility's leaders have threatened to sue if the Legislature meddles with its rates. The company is likely to seek a court decision that stops the temporary rate cut from going into effect, meaning SCE&G customers may not feel the effects of the Legislature's actions anyway.
In a statement, the company said that it was "evaluating its options if this proposed legislation becomes law." It also says it believes the law is unconstitutional.
It was that legal threat, along with warnings of a financially unstable utility, that made state senators reluctant to push for a total rollback of SCE&G's nuclear rates in recent months. They feared punishing the utility too much financially and opening the state to an unwinnable lawsuit.
But a government-commissioned report released this month, along with another study commissioned by the Senate, gave lawmakers the evidence they needed to cut SCE&G's rates, arguing the utility could survive a hit to its revenue.
SCE&G's electricity rates have loomed over the Legislature since the nuclear project was called off last July. The scuttled project costs the typical home $27 a month, which has gone toward a mountain of debt and payouts for its parent company’s shareholders.
And while Wednesday's agreement answers some of the questions looming over the state's energy sector, it doesn't answer them all. Lawmakers still need to resolve the future of Santee Cooper, the state-owned utility that owned just under half of the project.
Still, Massey said on the Senate floor, "Santee Cooper's day is coming."
The SCE&G deal is likely to end the Legislature's involvement, for now, in the unfolding drama surrounding the abandoned nuclear project. Lawmakers say they've done what they can to ease the financial pain for SCE&G customers.
"This is a very consequential issue. This is a once-in-a-generation issue," Massey said. "This is significant, what we've done today. Let's not understate that. What we are doing now are significant changes to our regulatory system in South Carolina, and I think that's important and a success."