What a difference a decade has made for SCANA.
Ten years ago this month, SCE&G’s parent company was sitting pretty. It won approval from the Public Service Commission to begin site work on a couple of nuclear reactors in Fairfield County, and didn’t even have to pay for them.
Armed with the legislatively enacted Base Load Review Act, the utility was able to bill its 700,000 South Carolina customers for the construction costs. After all, why eat into their own profits?
And there were profits. The company has extracted $2 billion from ratepayers since then, and shareholders pocketed more than a quarter of that money. Company officials took a tidy sum in bonuses, too.
But in July 2017, SCANA announced it was abandoning the project. There were problems with construction and escalating costs — maladies the company willfully hid from regulators and investors.
Still, it insisted its customers pay another $5 billion for its losses, and the Base Load Review Act allowed it.
Fast forward another year. The FBI and SLED are investigating these shenanigans, and this week a judge is expected to declare the Base Load Review Act unconstitutional.
Will that bring an end to this fiasco? Probably not.
But it’s a good sign South Carolina residents won’t be picking up SCANA’s $5 billion tab anytime soon.
Decade of decadence
Word of the pending ruling leaked out last week, and SCANA stock stumbled.
That’s actually a pity, because a lot of South Carolina residents — including SCE&G customers and employees — own some of those shares. It will likely hurt them more than the golden parachute crowd.
Particularly the former executive paid more than $1 million for undocumented consulting.
Of course, until the court files its order, there’s no telling what might happen.
“As a lawyer, I know better than to publicly predict which way a judge may rule,” says state Sen. Sandy Senn. “But as a senator, I would welcome a ruling that the law is unconstitutional as it opens the door for more complete relief to the ratepayers. Do I think ratepayers will ever be made 100 percent whole? No. Should they be? Yes.”
Earlier this year, the Legislature ordered the company to stop billing customers for most of the nuclear surcharge and pay back several months’ worth of payments.
The PSC could wipe out the surcharge completely before year’s end, and if the judge rules the law unconstitutional, it probably will.
But over a decade of decadence, ratepayers put an average of $2,000 into those plants. Will we get that money back?
Don’t bet on it.
“The bottom line is, we all got taken for a ride by top level SCANA executives and thinking that we will be wholly repaid is akin to thinking Bernie Madoff will pay back his ill-gotten spoils,” Senn says. “It should happen, but it won’t.”
That’s because many people assume the company will run for the protection of bankruptcy court, despite its recent profit reports.
State Rep. Peter McCoy, who led the legislative committee that investigated SCANA’s nuclear meltdown, says bankruptcy is one possible outcome.
He believes a ruling against the Base Load Review Act this week will likely spark a stampede to the courthouse. And SCANA will seek the protection of bankruptcy court.
“There are several class-action lawsuits being filed now,” McCoy says. “I don’t see that stopping if the law is ruled unconstitutional. If that happens, the floodgates will open.”
The Post and Courier has uncovered a plethora of evidence that could convince a jury that SCANA has not acted in good faith, perhaps enough to make the courts refund everyone’s money. Another former employer corroborated that narrative just last week.
Then there’s this: The utility’s attorneys and lobbyists actually wrote the legislation that allowed it to use its customers like a credit card, and persuaded the General Assembly to pass it.
It doesn’t look nearly as good for SCANA as it did 10 years ago. And in some ways, that’s a shame.
“I don’t enjoy seeing a South Carolina business going broke, but they have done their employees and their customers wrong, and they have shown no remorse,” McCoy says.
He’s absolutely right.
SCANA was sitting pretty. It had a monopoly and a legal guarantee of at least 10 percent profits. That’s a pretty good deal, but apparently it wasn’t good enough.
The company may never pay back the money it fleeced from ratepayers, who have no choice where they get their electricity.
But, hopefully, this week a judge will teach SCANA a little something about paybacks.
Reach Brian Hicks at firstname.lastname@example.org.