This afternoon, the state Public Service Commission will decide whether South Carolina Electric & Gas Co. will be allowed to raise customers’ monthly electric rates by 2.8 percent. They should vote down the request.
The rate hike on the agenda today is the eighth request in seven years related to the Base Load Review Act. That 2007 law allows utilities to recoup financing costs for new generating plants through rate increases during construction rather than waiting until the plants go online.
Specifically, the BLRA has allowed SCE&G to pay for financing to build two new nuclear reactors at the V.C. Summer site in Fairfield. By paying for the projects up front, SCE&G claims customers will eventually save $1 billion in construction costs and $4 billion over the lifetime of the reactors.
That statistic has been repeatedly used to justify the non-traditional financing methods allowed under the BLRA.
But it has never been independently verified.
“It was just a statement they [SCE&G] put in press releases,” said Dukes Scott, executive director of the state Office of Regulatory Staff.
Mr. Scott pointed out that his office will hire an independent accounting firm in the next few weeks to report on how much money, if any, the BLRA will actually save SCE&G customers in the short and long terms. The report should be ready by the new year, well before the next cycle of rate increase requests begins.
That investigation should provide badly needed insight. It ought to have been conducted seven years ago.
But even if SCE&G’s claim of billions of dollars saved proves accurate, it will offer little consolation to customers who have seen rates rise by more than 27 percent to pay for the new reactors. If the PSC approves the rate hike today, that figure will rise to roughly 30 percent.
And as the price tag for the new reactors keeps going up, so will the rate requests.
The PSC voted earlier this month to allow SCE&G to recover more than $700 million in unexpected costs related to delays in construction. The estimated date the first reactor will go online has been pushed back by three years from 2016 to 2019, with the second reactor following in 2020.
So far, the total cost overrun for the project stands at well over $1 billion. Nearly all of that additional burden will fall on ratepayers through future hikes.
That is, unless the PSC steps in and demands greater accountability from SCE&G.
The men and women charged with protecting South Carolinians against unreasonable utility costs need to demonstrate that they take that job seriously. They should vote down this rate hike.
The BLRA is intended to help the citizens of this state enjoy affordable, reliable and clean energy now and in the future. It is not a blank check.
State regulators should wait until the Office of Regulatory Staff has its audit in hand before considering any more BLRA-inspired increases in electrical rates.