South Carolina’s “Republican-controlled” House of Representatives will vote this week to effectively repeal a notorious piece of special interest legislation that socialized $2 billion worth of investment risk related to a failed nuclear power project.
House members – many of whom voted eleven years ago to approve the now-infamous “Base Load Review Act” – will cast ballots on Wednesday to amend the hated legislation, we’re told, rolling back currently assessed nuclear surcharges from 18 percent to zero.
Details are set to be ironed out in a “Republican” caucus meeting on Tuesday, but our sources described the rollback as “permanent” even though the new zero percent rate would be established on an interim basis – subject to change in the future by the state’s embattled Public Service Commission (SCPSC).
That’s a key point many activists pushing for the immediate repeal of the law should bear in mind …
Assuming the State Senate concurs (and it’s anybody’s guess what the State Senate will do), such an amendment would likely block future utility rate increases related to #NukeGate – the state of South Carolina’s spectacularly failed, colossally costly intervention in the energy marketplace.
Of course the amendment could usher in a wave of unintended, pernicious consequences – including the potential bankruptcy of embattled crony capitalist energy provider SCANA and a flood of litigation related to the constitutionality of both the controversial surcharge and its repeal.
Such a protracted legal battle could conceivably cripple the state’s economic viability for years to come and destroy its credibility in the bond markets.
As we’ve previously noted that’s the worst-case scenario here: A bitter legal fight that hamstrings economic growth, ruins our state’s already deteriorating reputation with the financial markets and still leaves ratepayers with nothing.
“Rate setting by the legislative fiat instead of through established regulatory process,” one source following the drama told us. “Should give the business community comfort.”
How did South Carolina land itself in such an untenable predicament?
To recap: With state lawmakers cheering them on, SCANA and state-owned utility Santee Cooper spent the past decade building a pair of next-generation nuclear reactors in Jenkinsville, S.C. at a cost of $9.8 billion. The money was spent, but the reactors were never finished. In fact they’re not even half-finished – with the cost to complete them reportedly ranging from anywhere between $9-16 billion.
As of this writing, there are no plans to complete the project …
Advanced by liberal lawmakers and allowed to become law in 2007 by former governor Mark Sanford, the BLRA enabled SCANA and Santee Cooper to bill ratepayers for the costs of constructing the reactors. In fact ratepayers are still being billed to the tune of $37 million a month – even though it’s highly unlikely the project will ever be completed.
Drowning in debt, Santee Cooper pulled the plug on the reactors six months ago – killing an estimated 5,600 jobs, squandering billions of dollars in investment and throwing the state’s energy future into chaos.
Just eight days before it bailed on the project, the state-owned power company announced massive rate increases on customers tied to “costs associated with nuclear construction and other system improvements.” The utility has also given its former leader a multimillion-dollar, taxpayer-subsidized golden parachute – even though documents released last summer showed its executives (and SCANA’s leaders) knew two years ago that the project was doomed.
No wonder people are furious …
Not surprisingly, #NukeGate has prompted a flood of lawsuits and a rapidly escalating, multi-jurisdictional criminal probe in addition to its ongoing political fallout. In fact we’re told this criminal probe is expanding in the feverish climate accompanying the brinksmanship at the S.C. State House.
“People need to be very careful right now,” a source close to the investigation told us.
(Click to view)
(Via: S.C. Governor)
Repeal of the BLRA was belatedly endorsed last week by governor Henry McMaster (above).
McMaster’s endorsement was viewed as a flip-flop, however, because he previously touted the proposed purchase of SCANA by Virginia-based Dominion Energy. Dominion’s $14.6 billion deal for the embattled utility – which includes $1.3 billion in relief for ratepayers – would be off the table in the event the legislation is repealed.
As we’ve said from the beginning of this process, there are no easy answers here. But lawmakers tell us they have crossed the rubicon when it comes to repeal.
“Mark my words, Dominion will fold – and renegotiate,” one legislative leader told us.
That’s a helluva gamble to take …
The vote is also a huge gamble politically.
Can this “eleven years, $2 billion later” flip-flop save the political skins of lawmakers who voted for the BLRA in 2007? After they’ve already wasted the public’s money and abused the public’s trust on a power plant that won’t produce a single watt of energy?
We doubt it …
As we’ve previously noted, we don’t trust the politicians who created this disaster to get us out of it. At all. Nor do we believe they are acting in the best interests of ratepayers now.
“They are posturing … pure and simple,” we wrote earlier this week. “Hoping the public will forget that their fingerprints are all over this disaster.”
Stay tuned … it looks like it’s going to be a week of high drama at the South Carolina State House.
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