VC Summer – Prudent?

Video above: Attorney, Scott Elliot, who testified Wednesday seems to agree the project was not prudent. The Office of Regulatory Staff and the Public Service Commission disagreed with this obviously.

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This past Wednesday, the House Utility Ratepayer Protection Committee convened for the first of what is expected to be many meetings investigating the mismanagement of and decision to abandon the VC Summer Project.

As I have written earlier, there is much blame to pass around. These hearings are designed not to point blame but to instead how best to avoid another disaster like this again. And hopefully – to protect the ratepayers (and taxpayers) from continuing to pay for a big hole in the ground.

Rather than write for hours how we got here, I’ll provide links for all those who might be interested on the history of this debacle. Please see those links at the end of this post.

First, yes let me state up front that I did vote for the Base Load Review Act (BLRA) As I shared in my August Community Update, back in 2006-2007 finding new sources of reliable energy was a state priority not just for the utilities, but also the legislature as well. Staring at a potential billion dollar carbon-tax (and several other economic factors) our state was told we were on the verge of an energy crisis. We were warned of partial blackouts and waves of planned outages along the coast in the warmer months of the year. Finding new sources of clean energy was paramount. Legislators were told passing the BLRA was absolutely necessary to facilitate this new energy production in South Carolina. With almost unanimous support (only 6 officials out of 170 are on record voting “no”), the bill passed quickly.

Unfortunately, as we have now learned, the level of mismanagement and lack of oversight of the VC Summer nuclear project was off the charts. After 5 hours of State Senate committee testimony on Monday and 5 hours of State House committee testimony Wednesday, this became painfully obvious.

One thing stood out to me in particular this week. Inside the language of the BLRA, the word “prudent” (or variation of the word…imprudent, prudency, etc) appeared 33 times. Surely, someone at the PSC, or ORS, or even at the utilities would have noticed how important that word was since it appeared no less than 33 times in the bill.

Please take a minute to watch a few of the videos and read some of the articles I have included below for more detail on this.

Do you agree with Office of Regulatory Staff (ORS) and Public Service Commission (PSC) that the project was “prudent” from the start? Was it “prudent” to have so many cost overruns? Was it “prudent” to forgive the repeated delays of Westinghosue responsible for overall construction? Was it “prudent” for ORS and PSC to let those utilities continue spending money without any detailed construction schedule? Was it “prudent” for ORS and the PSC to approve 9 (yes, nine) rate hikes? Was any of this “prudent”???

No, it was not prudent. It was a gigantic failure of management and oversight all throughout this process.

The BLRA states “Where a plant is abandoned after a base load review order approving rate recovery has been issued, the capital costs and AFUDC related to the plant shall nonetheless be recoverable under this article provided that the utility shall bear the burden of proving by a preponderance of the evidence that the decision to abandon construction of the plant was prudent. Without limiting the effect of Section 58-33-275(A), recovery of capital costs and the utility’s cost of capital associated with them may be disallowed only to the extent that the failure by the utility to anticipate or avoid the allegedly imprudent costs, or to minimize the magnitude of the costs, was imprudent considering the information available at the time that the utility could have acted to avoid or minimize the costs. The commission shall order the amortization and recovery through rates of the investment in the abandoned plant as part of an order adjusting rates under this article.”

So, tell me…if this entire mess was deemed “prudent” every step of the way; how can the costs related to the plant be recoverable because NOW the decision of the utilities to abandon construction of the plant are prudent?

Much more to come. As always, I’ll keep you informed and I appreciate the insight you give me each and every day. I will make sure we get (your) questions answered and ultimately figure out how to fix this going forward.

* Legislators told law may block SCANA from charging V.C. Summer costs to customers
* House Speaker calls for resignation of utility watchdog; Gov. Henry McMaster disagrees

* Management shake-up? SC utility chief expected to leave Friday

Text here.

Comments

  1. Paul Pietro says:

    The state is in a real pickle with this one. All we can do now is learn from the mistakes and plan for the future. I would guess that SCE&G is a very large employer. Not allowing them to recover something could be bad for employment and the local economy. Any money they might recover should be earmarked for a renewable energy project rather than paying the debts of this one. I think one of the issues with nuclear plants in the US is that no two plants are the same. So no one can predict the cost overruns of new designs. As opposed to something that has been built over and over. Anyway, I don’t know how viable solar energy really is, but I would not mind seeing some solar farms on all that land on I20 between Columbia and Augusta. No one will be completely satisfied with outcome and there will be a lot of criticism either way. Good luck. Hang in there.

  2. Lyn Richards says:

    Abolish the PSC and the ORS. Start from scratch. Establish one agency, through the legislature, that is accountable to consumers and advocates for them. Use language that says this agency has a fiduciary duty to utility customers. Put Columbia City Water under this committees jurisdiction. In other words, any utility in SC would be accountable to them. Fund them as a state agency. Hire competent personnel. No good ole boys.

  3. Barney Corbett says:

    It’s with great interest that I hear talk of selling Santee Cooper. I have a number of issues with this proposal but the main issue is what would the State do with the revenue. It seems that our Governor, so willing to save VC Summer, the associated construction jobs, and Fairfield county, would sell one State owned utility and create another.
    Was the Santee Cooper Board Chairman placed there to push the sale of the utility? The whole thing smells bad.
    How much have SCANA stock holders had to pay for the poor decisions made by their management.
    Nathan, please be careful how you move forward on this issue

  4. Representative Ballentine, I am a constituent with a question. I own some Santee Cooper Bonds that I bought through SanTee Cooper.
    What will happen to these bonds if the utility, SanTee Cooper is sold, goes bankrupt, etc? Will the bonds face value be honored when they come due.
    I am concerned.

  5. All, just noticed the comments today (9/18). I continue to get spam comments (THOUSANDS) and have to sort through them to find the REAL comments from real people. Anyway…I will continue to find answers to these questions and others and let you know what I find out. As always, thanks for your feedback and advice!

    Nathan

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