Speaker says agency chief should be fired; governor says no

South Carolina's House speaker said Wednesday the director of a utility regulation agency should be fired over the failure of a nuclear power project.

But Gov. Henry McMaster countered that he will not ask, nor does he want, Dukes Scott to resign. Scott leads the Office of Regulatory Staff, an agency tasked by law with equally weighing the interests of customers, utilities and the state's economy when making recommendations to the separate Public Service Commission.

It's an "impossible task," said Rep. James Smith, D-Columbia. "It seems to me the system is built to fail."

Smith is part of a House committee investigating two utilities' July 31 decision to abandon a nuclear power project after jointly spending nearly $10 billion. The panel cut Scott's testimony short before taking a break.

"New leadership" is necessary to assure the agency holds ratepayers' "interests in the highest regard," Lucas said in a statement hours later. "I believe this is the first of many steps that must occur to prevent this type of catastrophe from happening again."

State law doesn't allow that agency to put ratepayers first.

"The governor thinks any call for Mr. Scott's resignation is completely unwarranted," said McMaster's spokesman, Brian Symmes. "The governor is focused on getting the reactors built or getting ratepayers their money back. Mr. Scott has been an invaluable member of that team meeting with some of the largest utilities in the world."

Only the governor can remove the director of that agency. Scott declined to comment.

Customers of South Carolina Electric & Gas and state-owned Santee Cooper have jointly paid $2 billion through a series of rate hikes since 2009. The defunct project accounts for 18 percent of SCE&G's residential electric bills and more than 8 percent of Santee Cooper's. Neither utility intends to refund a dime.

SCE&G wants to recoup an additional $5 billion over six decades. Though the utility voluntarily withdrew its petition before the Public Service Commission, it intends to resubmit it after legislators have their say.

Lucas asked the panel to come up with recommendations for overhauling a law he and nearly all other legislators quickly approved in 2007 to encourage nuclear power construction. That law made it easy for utilities to charge customers for reactors as they're being built and recoup money even if a project is never finished.

It has consistently put utilities' interests above customers' and makes rate hike requests nearly automatic, Scott Elliott, an attorney for South Carolina Energy Users Committee, testified earlier Wednesday.

Regulators could have denied SCE&G's initial 2008 application to expand V.C. Summer Nuclear Station because it lacked a true construction schedule, but they've had little leeway since, said Elliott, who represents the state's major industries.

SCE&G "had a generic construction schedule" provided by their contractor that even the utility rejected as not site-specific, he said. The state Supreme Court upheld challenges to SCE&G's application and ability to saddle customers — not shareholders — with financing cost overruns.

Legislators were incensed.

"We embarked on a multiyear, multibillion-dollar project with a roadmap we didn't really believe was going to get us to the destination?" asked Rep. Kirkman Finlay, R-Columbia. "So we voted on a plan that allowed SCE&G free will and freehand with the ratepayer checkbook."

Scott said schedules did exist but were never followed. SCE&G updated their budget and timetable each quarter, giving regulators "no lawful way" to deny a rate hike request, he said.

Frank Knapp, president of the state's Small Business Chamber of Commerce, said legislators are simply trying to blame Scott for a bad law they passed.

"Any calls for Mr. Scott to be relieved of his position is simply scapegoating him for the SCE&G nuclear plant debacle," said Knapp, who is part of the "Stop the Blank Check Coalition" that was formed last year to oppose the law. "The legislators who championed the Base Load Review Act and voted for it hold that responsibility."