More than 700,000 South Carolina power customers are unfairly "holding the bag," the state's top attorney told regulators Tuesday, obligated to pay over $2 billion in interest debt for a failed nuclear reactor construction project that has never generated any electricity and likely never will.
Attorney General Alan Wilson's testimony came as part of a daylong hearing before the Public Service Commission, which is considering a request to end South Carolina Electric & Gas Co.'s ability to charge its customers for a now-abandoned nuclear power project at the V.C. Summer Nuclear Station.
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Earlier this year, SCE&G and state-owned utility Santee Cooper, its partner in the project, opted to halt construction, citing the bankruptcy of lead contractor Westinghouse as the primary reason. In rate hikes since 2009, SCE&G customers have been charged billions to cover the company's debt on the project, despite no power having been generated.
The prosecutor has filed as an intervener in a case filed by the Office of Regulatory Staff, the entity that represents public interests in utility matters. On Tuesday, the commission held a hearing to consider Regulatory Staff's request to halt the billing, which amounts to roughly $27 per month, per customer.
Wilson, a Republican, said Tuesday that SCE&G customers didn't have sufficient warning the company wanted numerous rate hikes to help fund construction of new reactors, as meeting notices placed perfunctorily in newspapers were the only warning any increases had been submitted to regulators. Once the hikes were approved, inserts in monthly bills were the only notice customers received, Wilson said.
Wilson said he felt compelled to speak on behalf of the more than 700,000 SCE&G ratepayers who've been subjected to those increases, which are legal under a law swiftly passed in 2008 by lawmakers eager to see the positive benefits promised by the massive economic project. The law has previously been upheld by the state's highest court, but earlier this year, Wilson's office issued a non-legally-binding opinion calling the law allowing the upfront charges "constitutionally suspect."
"It is our position that unconstitutional application of the Base Load Review Act has deprived these ratepayers of their right to be adequately informed of the numerous rate increases they have incurred over the past 10 years," Wilson said Tuesday.
In more than two hours before the commission Tuesday, an attorney for SCE&G warned of potentially catastrophic economic consequences if the billing, which brings in $445 million a year for SCE&G, were to stop. Ending the payments, Belton Zeigler warned, would cause SCE&G to slide into bankruptcy if regulators make them stop charging ratepayers for the project.
"It could set in motion a quick cascade of events that would devolve to insolvency, financial crisis and ultimately a bankruptcy filing by SCE&G," Zeigler said, of cutting off the funding.
Last month, SCE&G announced plans to seek an immediate 3.5 percent rate reduction, which incoming President Keller Kissam said would save customers $450 million over five years. That move would also be subject to regulatory approval. In addition, Kissam said the company's shareholders will be responsible for net construction costs remaining from the failed V.C. Summer project, taking lower earnings payouts over the next 50 years.
The commission will rule on Regulatory Staff's request later. The multibillion-dollar project failure has spawned more than half-a-dozen lawsuits, and a judge is holding a hearing over possible consolidation of some of those next month. State and federal authorities are also investigating the failure, which caused thousands to lose their jobs.
Kinnard can be reached at http://twitter.com/MegKinnardAP . Read her work at https://apnews.com/search/meg%20kinnard .