Rate relief for electric customers could threaten proposed SCANA merger
COLUMBIA, SC (WIS) - The bill that passed the House of Representatives on Wednesday is considered a "first step toward relief" for burdened electric customers in South Carolina. The vote was overwhelming. By 119 to 1, the measure to rollback customers' bills cleared the House.
Members want to eliminate about 19% of SCE&G customers' bills, which goes to the nuclear reactors that were abandoned at V.C. Summer in Fairfield County.
However, this could threaten another energy deal some claim is more lucrative. Virginia-based utility Dominion Energy has a deal in the works to merge with SCANA. They claim this spells trouble for that deal if the bill becomes law.
At least one business owner in Columbia was happy to hear about the bill's clearing the House on Wednesday, however.
"In a restaurant or any big business, you use a lot of electricity," Eddie Wales said.
From stove to lights and heating and air conditioning, there's a costly electric bill each month for Wales at Motor Supply Bistro.
"Our bill averages around $3,000 a month, so it's significant," Wales said.
Wales has noticed a trend with rates going up; he pays more than $500 each month for nuclear reactors that are now an abandoned project. That's why he is happy to hear of bills possibly lowering.
"The cost of your electric bill is the cost of doing business," he said.
Rates would be reduced until the Public Service Commission, which oversees utilities in South Carolina, can evaluate its own permanent rate. There's no specific timetable for that.
The plan the House passed doesn't just rollback rates temporarily, it also repeals the Base Load Review Act prospectively. That means, the law that allows utilities to charge customers for projects like the nuclear reactors before they are finished, is repealed going further.
There's been months of meetings and debate and testimony on this. The Speaker of the House quoted Winston Churchill, applying a war-time saying to the issue.
"And it's essentially that, 'the toughest issues that we have, come across once in a lifetime. But never give up on something that you can't go a day without thinking about,'" Speaker Jay Lucas (R- Darlington) said.
Some had hoped for a retroactive repeal of the Base Load Review Act, too, so customers could be refunded for all they've paid in for the reactors over the years. However, House members feel that would be unconstitutional and would be challenged with lawsuits and held up in court.
"We are taking the position that it would be best for us to go back to the way it was before where a utility would ultimately have to construct the project and ensure that it was in use before they started charging the customers," Rep. Russell Ott (D- Calhoun) said.
The utility company Dominion Energy, which is looking to merge with SCE&G, says this would threaten that deal. They want to give one-time refunds to ratepayers this fall, averaging at $1,000.
"I can't impact that, but I can impact the rates that I think are being unfairly paid by the citizens of this state," Speaker Lucas alluded to the deal from the House floor.
Wales is focusing on the bill that's likely to become law, for rate reductions.
"Anything makes a difference," he said.
The bill still has to pass the Senate, to become law. But the chances are looking good. The governor's office also said he would sign it, as is.
Read Dominion Energy's full statement below:
We did not see the proposed changes to South Carolina House Bill 4375 prior to introduction today and are in the process of reviewing them.
While our review is continuing, it is clear that if the legislation became law it would put a standalone SCE&G in a precarious financial position.
The House action, assuming it becomes law and survives legal challenges, could offer temporary relief for SCE&G customers, but unfortunately could threaten the permanent solution offered by Dominion.
Regarding our combining with SCANA, as we have said from the beginning any change in law that has a significant financial impact on our proposed transaction would create a path for Dominion Energy to walk away from our proposal and eliminate the immediate positive benefits for South Carolina. We will continue to evaluate any proposals in the House or Senate utilizing that standard of measure.
Significant financial consequences would not allow us to provide $12 billion of relief to SCE&G's customers.
When we first approached SCANA, our goal was to propose a solution that provided a path forward for their customers and the State of South Carolina. We continue to believe our proposal offers the best and most-certain long-term relief for customers — $1.3 billion in cash payments, a permanent rate reduction and rate stability for the future. Our proposal provides benefits for all stakeholders.
To recap the positive benefits of the Dominion Energy proposal for SCE&G electric customers, it would:
1. Provide $1.3 billion in cash payments to SCE&G customers – payments that would provide $1,000 to the average residential customer, as well as substantial payments to South Carolina businesses and industries in the SCE&G service area;
2. Cut overall rates to customers – not just rates for the nuclear portion of customer bills – by 5 percent immediately, and would shorten the terms of payment for the nuclear portion of customer bills from 50 years to 20 years, producing over $8 billion in customer savings from the debt load;
3. Offer job protections to SCE&G employees until 2020, and also preserve the headquarters in Cayce, South Carolina; and
4. Increase annual charitable giving by $1 million, a 33 percent increase.
We look forward to presenting our prospective to regulators and policymakers in South Carolina.
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