A lot of factors went into SCE&G and Santee Cooper spending $9 billion on two nuclear reactors that will never be completed: the Legislature’s decision to upend state law in order to facilitate the construction project, SCE&G’s efforts to conceal problems with the project from regulators and the public, Santee Cooper’s refusal to blow the whistle on its construction partner.
But the V.C. Summer Nuclear Plant expansion never could have gone so bad if the S.C. Public Service Commission hadn’t given SCE&G the benefit of the doubt, time after time, and looked the other way as critics raised questions about the utility’s claims. That is, it couldn’t have happened without a regulatory agency that wasn’t interested in regulating.
It’s against that backdrop that we welcome Duke Energy CEO Lynn Good’s recent assessment of the PSC: “It’s clear the regulatory and related business environment in South Carolina has changed, and this will affect the investment climate in the state, in our industry and in others.”
Ms. Good’s comments on an earnings call to shareholders came in response to the PSC’s refusal to let Duke’s two utilities charge ratepayers $242 million in coal ash cleanup costs. It came in the wake of regulators’ criticism of executive compensation that was “excessively high” and a utility that was “tone-deaf” to the political climate in South Carolina.
As environmental attorney Bob Guild put it: “If this is a new trend, it’s a trend in the right direction.”
Mr. Guild noted to The Post and Courier’s Andrew Brown that utility commissioners are supposed to be “aggressive regulators,” not “passive, neutral observers.”
But that’s precisely what they have been — largely because that’s what the Legislature wanted them to be. Our lawmakers elect the members of the Public Service Commission, legislators have always been stridently pro-utility and anti-regulation, and they became even more so early this century, as visions of a nuclear renaissance started dancing in their heads. They passed a law that shifted the risk of building nuclear reactors from the utilities to their captive ratepayers, made it virtually impossible for regulators to turn down the utilities’ rate hike requests once they gave the initial OK to begin construction and even replaced the state agency that was supposed to protect ratepayers in contested hearings with one that was required by law to balance the interests of ratepayers and utilities.
In all of this, our lawmakers apparently forgot why they had created utility regulators to begin with: to act in place of the free market, to protect customers from the monopoly that we gave utilities because it was prohibitively expensive and potentially dangerous to trust free-market competition to work in the utility sector.
We don’t know whether technology has advanced to the point that it’s no longer prohibitively expensive to allow competition in the utility industry, although we believe lawmakers need to seriously explore that possibility. But we do know this: If you don’t want utilities to be subjected to state regulation, the solution is not to simply let utilities do whatever they want. It’s to break up the monopolies, and allow customers to pick the utility they want, rather than having to take the one they’ve been assigned.
Unless or until the Legislature sees fit to allow energy competition in South Carolina, we need that new regulatory environment that Ms. Good finds so troublesome.