Today, state utility regulators will make a decision that will cap more than a year and a half of wrangling over the fallout from SCANA and Santee Cooper’s decision to abandon construction on two nuclear reactors after spending about $9 billion on them.
In deciding the fate of SCANA, their choices will significantly impact more than 700,000 South Carolina residents and businesses for decades to come. Monthly power bills are at stake, and so is the South Carolina economy.
The state Public Service Commission must choose with care.
The most widely discussed option on the table would allow Virginia-based Dominion Energy to complete its buyout of SCANA and its subsidiary SCE&G. Doing so would mean that Dominion absorbs some of the cost for the failed reactors. But SCE&G customers would still have to cover $2.3 billion over the next two decades.
It’s not a very good deal, especially considering the broader implications.
Dominion could use its purchase of SCANA to make it easier to expand the natural gas Atlantic Coast Pipeline into South Carolina at ratepayer expense, for example. Our state doesn’t really have a demonstrated need for more natural gas, but that’s largely irrelevant under current regulations.
Dominion’s aggressive, months-long pursuit of SCANA suggests that the company sees substantial profit to be made, even though SCANA is saddled with billions of dollars in debt. That’s a perfectly logical aim for a business, but it’s difficult to see how it would benefit ratepayers.
Another option would be to go with a plan proposed by the state Office of Regulatory Staff, a watchdog agency, which would ask SCANA to take additional steps to free up some cash and cut its debt burden, saving customers a substantial amount of money.
Dominion could still proceed with the buyout, albeit under slightly different terms. If the company chose to walk away, another buyer could make an offer. Or SCANA could stick around on its own terms.
The ORS deal would still leave SCE&G ratepayers on the hook for about $1.7 billion, but a $600 million discount over the Dominion offer isn’t exactly chump change.
Of course, the PSC also has the option of nixing Dominion’s buyout and forcing SCANA to eat the entire cost of the failed project. At least two separate studies have found that doing so wouldn’t likely throw the utility into bankruptcy, although it would be a risky decision and might not pass legal muster.
Some prominent South Carolina politicians — including Attorney General Alan Wilson and House Speaker Jay Lucas — have publicly asked the PSC to approve the Dominion deal.
That’s a particularly shocking request from the leader of the state House, which just a few months ago threatened to kill any legislative rate cut that didn’t slash the full cost of the nuclear reactors from SCE&G customers’ monthly power bills.
Whatever decision the PSC makes today could effectively wrap up most of the loose threads hanging around one of the worst financial disasters in South Carolina history.
Its previous choices to nonchalantly grant rate hikes, budget increases and deadline extensions have largely gotten us into this mess. It would be a terrible disappointment to end months of intensive debates, legal challenges and investigations with another rubber stamp.
Today is one of the last, best opportunities to protect SCE&G ratepayers moving forward. Make it count.