State: Law allowing rate hikes 'constitutionally suspect' - wistv.com - Columbia, South Carolina

SC Attorney General: state law allowing rate hikes 'constitutionally suspect'

Source: WIS Source: WIS

By MEG KINNARD
Associated Press

COLUMBIA, S.C. (AP/WIS) - The South Carolina Attorney General's office says a state law used by utilities to raise customers' rates to fund a now-defunct nuclear project is "constitutionally suspect."

Attorney General Alan Wilson released the opinion on the 2007 Base Load Review Act Tuesday. 

Solicitor General Bob Cook wrote the opinion obtained Tuesday by The Associated Press.

A bipartisan group of lawmakers recently asked prosecutors to study the 2007 law, which allowed South Carolina Electric & Gas Co. and Santee Cooper to repeatedly request rate increases to fund the V.C. Summer Nuclear Station project.

The companies abandoned the venture earlier this year, after charging more than $2 billion to ratepayers.

“The Base Load Review Act, which is constitutionally suspect, is unprecedented in South Carolina history,” Attorney General Wilson said. “Our citizens have paid billions of dollars and got absolutely nothing from it but a money pit.”

In his opinion, Cook wrote that the Base Load Review Act must be presumed to be constitutionally valid and only a court can declare the act, or any part of it, unconstitutional. But the Attorney General’s Office opinion brings up potential constitutional issues that would likely arise if the law were challenged in court.

The state Supreme Court rejected a 2014 challenge to the law. Attorney general's opinions carry no legal heft of their own but generally represent the position of the state.

State lawmakers passed the Base Load Review Act as a way to allow SCE&G and Santee Cooper to raise rates before the nuclear plants were operating, in an effort to prevent larger rate hikes once they were online. 

The opinion points out that, under South Carolina law, a power plant must be “used and useful” to recover the cost of building it. However, under the BLRA, “… the utility may still recoup, through rate increases, its capital costs, construction costs and a return on investment for utility investors. Yet, consumers receive nothing in return.” That provision may be seen by a court as an unconstitutional “taking” of property for private use, which violates the U.S. Constitution’s Fifth Amendment protection against private property being taken without due process and a similar provision in the South Carolina Constitution.

The opinion also looked at whether it would be constitutional for state lawmakers to retroactively change the BLRA.  The opinion concluded that if the legislature does act, it could do so constitutionally if lawmakers balance consumer and investor interests to avoid creating a “taking” from either side.

The opinion advises members of the General Assembly that they may constitutionally take action to provide relief to ratepayers.

Attorney general's opinions carry no legal heft of their own but generally represent the position of the state. Representatives for both utilities didn't immediately respond to emailed requests for comment on the release.

The makeup of the court has since changed, so it's unknown of the current justices would rule the same way.

Both Wilson's office and top state lawmakers, including House Speaker Jay Lucas, have asked state police to probe possible criminality on the part of SCE&G and parent company SCANA in the project's failure. Federal authorities have also subpoenaed documents from both utilities, and a half-dozen lawsuits have been filed in state and federal court.

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