South Carolina state lawmakers are bragging about providing beleaguered ratepayers with $270 million in relief related to #NukeGate – a catastrophic command economic failure involving a pair of scuttled nuclear reactors in Jenkinsville, S.C.
Did they really, though?
No, not at all …
According to multiple sources familiar with the last-minute legislative negotiations related to this ongoing debacle, there’s a dirty little secret associated with this $270 million windfall (which was exclusively reported last month by this news site). Specifically, we’re told this pot of money was already on the table as part of a bigger private sector offer … one lawmakers rejected prior to deciding to take this $270 million via legislative diktat.
More on the details of that constitutionally dubious legislative deal in a moment …
First, lawmakers bragging about providing rate relief of any denomination is bitterly ironic … no matter how it couched.
Let’s not forget (ever) that it was the legislature that put ratepayers on the hook for more than $2 billion of the costs associated with this botched project. We’re referring, of course, to the notorious Base Load Review Act (BLRA) – legislation advanced by liberal state lawmakers and allowed to become law in 2007 by former governor Mark Sanford.
Under the terms of this legislation, crony capitalist utility SCANA and government-owned utility Santee Cooper were allowed to impose an eighteen percent “nuclear surcharge” on ratepayers for the V.C. Summer nuclear power station expansion project – a charge they are still paying.
Are we now to pat these politicians on the back for giving back a fraction of the money stolen from us?
We think not …
The V.C. Summer reactors were supposed to have been operational in 2016 and 2017, respectively, at a cost of $9.8 billion.
That obviously didn’t happen …
The money was spent, the reactors just weren’t finished – and the utilities couldn’t afford the $10-16 billion price tag necessary to complete them. Last July, Santee Cooper pulled the plug on the project – killing an estimated 5,600 jobs and throwing the Palmetto State’s energy and economic future into chaos. Worth noting? Santee Cooper scrapped the project just eight days after it proposed yet another rate hike on customers. Months after pulling the plug, it gave its disgraced former CEO a taxpayer-funded golden parachute totaling $16 million.
(Click to view)
(Via: Santee Cooper)
Now the utility – which we urged lawmakers to sell over a decade ago – is on the verge of a spectacular implosion. It is also at the center of a massive federal investigation over the lies it told while running up that massive debt.
SCANA? It is trying desperately to conclude a deal with Virginia-based Dominion Energy – which has offered $14.6 billion (including $1.3 billion in rebates to ratepayers) to purchase the company. Dominion has also agreed to absorb $1.7 billion of the debt associated with the botched project and make other energy infrastructure investments in the Palmetto State.
Of course the Dominion deal is in real jeopardy after lawmakers approved their “compromise” – sparking the protracted court battle we warned readers about months ago.
This news site explicitly warned on numerous prior occasions that “the uncertainty from a protracted court fight could cost the state billions of dollars in economic activity and tens of thousands of jobs.” Hell, it already is costing the state jobs. Accordingly, we pushed from the very beginning of this process for “a reasonable settlement that maximizes ratepayer relief, within the confines of what the courts will accept and the markets will bear.”
Alternately, we urged them to immediately and completely repeal the BLRA.
Lawmakers, per usual, did not listen to us …
But back to the fundamental question of “maximizing ratepayer relief.” Are lawmakers doing that with their compromise?
According to our sources, last month SCANA executives approached leaders of the S.C. General Assembly – specifically those members appointed to the conference committee on the #NukeGate legislation – and offered to include $270 million in additional ratepayer relief to the previously proposed private sector deal.
This is money SCANA essentially sequestered several weeks ago when it decided to delay a dividend payment on its publicly traded stock.
Added to the $1.3 billion in cash relief offered as part of the Dominion deal, SCANA’s proposal would have raised the immediate ratepayer reimbursement associated with the deal to around $1.6 billion.
Not bad …
Legislative leaders weren’t interested in negotiating, though. According to our sources, S.C. Senate “majority” leader Shane Massey (below) unilaterally rejected this deal – which was never even presented to rank-and-file members of either chamber. In fact, we’re told it was Massey’s hard line which resulted in the adoption of the eventual compromise between S.C. speaker of the House Jay Lucas and Senate minority leader Nikki Setzler.
“Massey left them with no choice,” one insider told us. “They didn’t even take the offer to their people.”
(Click to view)
That’s right … most lawmakers voted to accept the conference committee’s “compromise” (and later voted to override a veto from governor Henry McMaster) without ever knowing that the $270 million they were essentially taking from SCANA had already been offered as part of a bigger windfall for ratepayers.
Would possession of this knowledge have changed the outcome of either of these key votes? We’re not sure, but several rank-and-file members we spoke with prior to publishing this report were unhappy that they did not receive all of the information associated with these negotiations prior to being presented with the final compromise.
Massey did not immediately respond to our request for comment on the last-minute negotiations, but sources close to the Aiken “Republican” confirmed the substance of our reporting. They also argued Massey was correct to reject the proposal – even with the additional $270 million in upfront relief offered by SCANA. Why? Because Massey apparently (now) believes the state has a winnable case in court.
Previously, Massey refused to cut the nuclear surcharge below a certain threshold because he feared SCANA’s lawsuit against the state would be successful.
Clearly he has reassessed his thinking … which is ironic considering the legislative compromise is in federal court.
A Senate source told us Massey rejected the SCANA offer because he felt it was not a good long-term deal for consumers – and that the amended rates established by the S.C. Public Service Commission (SCPSC) will be upheld by the courts.
“It sells out customers in the long-term for short-term relief we could probably get anyway,” the source told told us. “The only reason to agree to (the SCANA offer) is if you think you’re going to lose everything in the legislation and (SCPSC) and Supreme Court rule against you on long term rate.”
“We’re (not) going to get shut out like that,” the source predicted, adding that “$270 million in six months is not worth giving up that shot for rate relief over decades.”
That’s quite a gamble to take … especially without letting the rest of the legislature know you are taking it …
As we’ve stated from the very beginning of this drama, we don’t trust the politicians who created this disaster to get us out of it. At all. And apparently we were correct in our assessment.
“Our goal is simple: A reasonable settlement that maximizes ratepayer relief, within the confines of what the courts will accept and the markets will bear,” we wrote back in January.
SCANA’s offer was clearly another significant step in that direction …
UPDATE: New details on the deal …
WANNA SOUND OFF?
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