South Carolina lawmakers continue to play political games with the state’s utility rates – refusing to commit to complete and immediate repeal of a hated surcharge tied to a botched nuclear power plant (a.k.a. #NukeGate).
Instead, state lawmakers appear content to continue bickering and arguing over dueling half-measures that would temporarily/ partially/ maybe address this surcharge – even though these half-measures would likely succeed in torpedoing a proposed private sector solution to the problem.
Last week, members of the S.C. House of Representatives voted against concurring with the State Senate’s temporary/ partial repeal of this surcharge. That means differences between the two chambers must now be resolved by a six-member “conference committee” comprised of three representatives and three state senators. Whatever solution is hammered out by this committee must be approved by both chambers prior to heading to the desk of governor Henry McMaster.
Frankly, we view the drama as much ado about nothing … or at least that’s how we would view it if it didn’t involve a $14.6 billion deal to purchase one of the utilities at the heart of the ongoing fiasco.
To recap: The nuclear surcharge in question was used by state-owned utility Santee Cooper and crony capitalist SCANA to socialize more than $2 billion (and counting) worth of investment risk associated with the construction of two next generation nuclear reactors in Fairfield County, S.C. It was made possible thanks to the now notorious Base Load Review Act (BLRA), which was advanced by liberal state lawmakers and allowed to become law in 2007 by former governor Mark Sanford.
The two utilities spent ten years building (or as it turns out, not building) these reactors a cost of $9.8 billion. The project wasn’t completed, though. In fact it’s not even half-completed – with the cost to finish it reportedly ranging anywhere between $9-16 billion.
That’s clearly not happening – yet ratepayers remain on the hook for the reactors.
Drowning in debt, Santee Cooper pulled the plug on the project last July – killing an estimated 5,600 jobs and throwing the state’s energy future into chaos. The government-run utility’s decision has also prompted a flood of lawsuits and criminal investigations – as well as a full-court press by lawmakers to try and undo the damage they did (or at least give that impression to voters).
What have they come up with? Not much … except more government meddling.
“Neither chamber is technically doing – or ‘undoing’ – anything,” we wrote last week. “In fact, they don’t have the authority to do so. Lawmakers are just tinkering around the edges of the problem, providing limited, temporary ‘solutions’ to a multi-decade mess.”
Under the terms of the Senate proposal, the nuclear surcharge would be lowered from 18 percent to five percent. This five percent rate would only be locked in for six months, though. Unelected bureaucrats on the embattled S.C. Public Service Commission (SCPSC) could raise rates again – after this year’s elections. Perhaps in perpetuity.
The House proposal is even more nebulous (if you can imagine that). It would set an “experimental rate” of zero for the 18 percent nuclear surcharge, however this rate would soon be replaced by an “interim rate” established by the SCPSC. Eventually the “interim rate” would be replaced by an “actual rate.”
Yeah … does anyone really believe these politicians are serious about eliminating this surcharge?
If they were, they would have done it … months ago.
We’ve heard plenty of talk from lawmakers but – as usual – we’ve seen precious little from them in the way of action.
Of interest, two of the conferees from the State Senate – minority leader Nikki Setzler and judiciary chairman Luke Rankin – were lead sponsors of the hated BLRA. They literally created this problem, and now they want to be credited with solving it?
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In addition to the House and Senate proposals, there is the deal put on the table by Virginia-based Dominion Energy. Under the terms of this proposal, the nuclear surcharge would be lowered from 18 to 11 percent over the next seven years and from 11 percent to zero over the next 12 years. Of course Dominion’s offer includes something neither the House nor Senate can provide – $1.3 billion in upfront relief to rate
We haven’t endorsed the Dominion deal at this point because we believe the company can afford to kick in a little more in longer-term ratepayer relief.
Of course, if confronted with a choice between Dominion’s cash-in-hand and lawmakers’ promises … that’s a no-brainer.
The legislative conference committee – which also includes senate majority leader Shane Massey, House judiciary subcommittee chairman Peter McCoy, state representative Kirkman Finlay and House minority leader Todd Rutherford – will hold its first meeting early next week.
As noted above, whatever “solution” this committee endorses must be approved by both chambers of the legislature. That may not be automatic in this case, either, as one state senator – Brad Hutto – has hinted that he may filibuster any conference committee report that doesn’t meet with his approval.
Assuming a legislative “fix” makes it to McMaster’s desk, another round of drama awaits.
McMaster has been all over the map on this issue. He initially endorsed the Dominion deal, but three weeks later he flip-flopped and endorsed a repeal of the BLRA (which would kill the Dominion deal).
A senior moment?
Who knows … but McMaster is likely about to have to deal with this issue for real.
WANNA SOUND OFF?
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