It’s a story all too familiar to millions of South Carolina electric ratepayers.
Some $381 million in lost construction costs; $1.3 billion to shut down an existing nuclear power plant; $871 million for a nuclear project that never even broke ground. Those and other disasters will cost Florida ratepayers about $6 billion over the next few decades.
Here in South Carolina, Santee Cooper and SCE&G customers could be stuck paying as much as $9 billion over the next six decades for two new nuclear reactors that will never generate electricity unless lawmakers and regulators effectively intervene on their behalf.
All this is thanks to a 2007 bill that, like a comparable one in Florida, allowed utilities to charge customers up front for large capital projects and then recoup costs later, even if projects were never completed.
In South Carolina, that law led to one massive failure. In Florida it contributed to a handful.
The lesson from Florida is that South Carolinians remain vulnerable until the Base Load Review Act is either repealed or significantly modified. Until then, utilities in the state could theoretically use it to advance other major projects while leaving customers on the hook for the cost.
That shouldn’t be allowed to happen.
Interestingly, Florida never actually repealed their law. Instead, lawmakers added two key words in 2013 that set a much higher bar for getting new projects off the ground — “reasonable” and “feasible.” No nuclear projects have been proposed since then.
It’s almost inconceivable that a law should have to state that building a new nuclear reactor on the backs of millions of ratepayers should be “reasonable” and “feasible.” Any business would be incredibly foolish to pursue such a massive investment that didn’t meet such a minimal standard.
But the BLRA and its Florida equivalent allow, and in fact encourage, utilities to go big by removing any economic risk associated with inherently risky investments.
That was deeply misguided in 2007. It seems unfathomably wrongheaded now in the wake of so many high-profile failures across the Southeast.
In South Carolina, utilities must prove that their nuclear costs were “prudently incurred” before passing them on to customers under the BLRA. SCE&G and Santee Cooper did not likely meet even that low bar.
The two nuclear reactors that were abandoned in July have been plagued by delays and cost overruns almost since construction began in 2009. At least one professional report by engineering firm Bechtel in 2015 found serious flaws in design and management and raised questions about the project’s feasibility.
But work proceeded, customers continued to pay higher rates, and utility executives kept telling lawmakers and regulators that construction on the reactors was proceeding appropriately. That’s certainly not “prudent.”
Lawmakers must now make it a priority when they return to session in January to help SCE&G and Santee Cooper customers recover as much money as possible and avoid paying higher electric bills for decades for a failure that was entirely out of their hands.
They must also undo the law that made that failure possible in the first place. Otherwise — as in Florida — South Carolina’s first nuclear disaster might not be its last.