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SCE&G customers close to getting rate cuts for failed nuclear project

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Senate nuclear debate

South Carolina senators huddle in between debating a plan that clips SCANA's nuclear charges for V.C. Summer. Staff/Andrew Brown 

COLUMBIA — South Carolina Electric & Gas customers could see their bills drop after the state Senate voted Wednesday to temporarily suspend much of the charges for abandoned reactors at the V.C. Summer Nuclear Station.

The S.C. House already agreed to cut all of the $27 a month that the average residential customer pays for work that will never produce any electricity. After one last vote in the Senate on Thursday, legislators will need to negotiate a final version to send to Gov. Henry McMaster's desk.

However, McMaster said Wednesday that he would veto any bill that did not totally eliminate the nuclear charges to customers.

Any rate cuts will likely meet legal challenges from SCE&G, which has charged its 700,000 customers for the nuclear work under a 2007 law. Legislators want to take the unprecedented step of stopping the payments, citing misleading updates and hidden audits that covered up troubles at the Fairfield County site before work stopped last summer.

While the House and Senate have agreed to suspend customer payments until the end of the year, they disagree on how much to cut them.

The Senate voted 26-16 to slash rates by 13 percent, the amount a consultant's study released this week said would not harm SCE&G's parent, SCANA.

The House cuts the entire 18 percent of monthly bills targeted for the nuclear project. A separate study conducted by the state's utility watchdog found that SCANA could withstand losing that money by ending dividends to its stock investors.

The General Assembly has pledged to help SCE&G customers in the wake of what's widely considered the state's worst business failure after SCE&G and its partner, state-run Santee Cooper, sank $9 billion into the project. 

At one point during the debate Wednesday, Senate President Pro Tem Hugh Leatherman, R-Florence, suggested he's never worked with a company as "misleading" as SCANA. 

After Senate Majority Shane Massey, R-Edgefield, went over emails and documents that highlighted what SCANA's executives failed to share with the state's utility regulators, Sen. Mia McLeod, D-Columbia, asked whether any of the Cayce company's executives would go to jail.

"We don't know yet," Massey said. Later he added, "They should."

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SCANA has argued that cutting the $37 million per month nuclear payments could push the utility into bankruptcy. Some lawmakers also suggested stopping the payments could hurt the state's business-friendly reputation. 

Sen. Brad Hutto, D-Orangeburg, questioned whether the move was constitutional and if the state could win a lawsuit against SCANA. 

Hutto also pointed out that slashing the nuclear charges, even temporarily, could cause Dominion Energy to drop its $14.6 billion offer to buy SCANA. Dominion CEO Thomas Farrell threatened to do just that earlier Wednesday if the Senate passed a rate cut. 

Dominion's deal would refund part of the $2 billion customers already paid for the reactors, and it would partially reduce future rates. But it also requires SCANA's customers to pay another $3.8 billion for the reactors over the next two decades. 

"If we pass this, there is nothing to stop Dominion from walking away," Hutto said on the Senate floor. 

"There is nothing to stop Dominion from walking tomorrow," Massey replied.

Even if the Legislature clips SCANA's electric rates, it won't last forever. Lawmakers have agreed to allow the state's utility regulators on the Public Service Commission and the states' court system to ultimately decide whether SCANA or its customers pay for the useless reactors. 

The question is whether customers continue to pay those charges while the financial crisis is sorted out over the next year. 

Massey said he wanted to eliminate all of the nuclear charges, but he needed to ensure SCANA wasn't pushed into bankruptcy. That's why he pitched the partial reduction. 

"I really don't like that," Massey said. "The only fair resolution is to pull it all out."

Sen. Mike Fanning, a Democrat whose district includes the nuclear plant site, asked senators for a full repeal but his amendment was defeated.

Reach Andrew Brown at 843-708-1830 or follow him on Twitter @andy_ed_brown.

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