State regulators argue in a new filing that SCE&G customers should be credited for the last two years of bills that paid for an ill-fated nuclear project.
The Office of Regulatory Staff said the utility should have abandoned work on the V.C. Summer expansion after 2015, when it became apparent delays and costs were spiraling out of control. It recommends a reduction of $193.3 million per year in customer’s rates by January 2019, which would bring total rate reductions to more than 20 percent since the project was abandoned in July 2017. SCE&G has requested an 8 percent reduction.
The filing was submitted Tuesday to the state Public Service Commission (PSC), which will make the ultimate decision on power rates. If the commission agrees with the ORS findings, then SCE&G could be forced to eat almost $1.9 billion in debt from the project.
ORS’s report said SCE&G did not act in good faith the last two years of the project, keeping secret an integrated construction schedule and an audit critical of massive delays. The utility did not inform ORS or the PSC of the audit while simultaneously seeking approval to raise rates and continue work.
“I conclude that SCE&G itself did not believe the cost and schedule it submitted to the PSC, but rather only sought the approval of those revisions as a means to gain a rate increase,” nuclear expert Gary Jones said in testimony provided by ORS.
The position is significant because the Base Load Review Act allows SCE&G to charge customers for nuclear debt if the money was spent “prudently.” Jones argued the utility’s actions after 2015 show it was submitting misleading information to state regulators. He noted internal memos from the CEO of SCE&G’s parent company SCANA in 2014 which questioned the costs and timeline being submitted by construction contractors. However, the utility still submitted those figures to regulators without revealing the severity of its internal concerns.
“Even though SCE&G did not believe the values provided by (the contractors), SCE&G submitted the inconsistent and unreliable cost and construction schedules for the March 12, 2015 filing with the PSC,” Jones said.
The November 2015 audit by engineering firm Bechtel was also kept secret from regulators. Jones said SCE&G kept the Bechtel report secret even though ORS regulators increasingly became aware that some sort of assessment had been done. Jones noted ORS became suspicious during an October 2015 meeting with SCE&G and the project’s contractor.
“A person unknown to ORS stood at an October 15, 2015 Plan of the Day meeting, and thanked SCE&G personnel for all their good cooperation and support during the assessment that had just been completed,” Jones said. “The individual then donned a Bechtel hardhat.”
Regulators proposed that legislators change the law so SCE&G could securitize its debt, which they consider the “best-case scenario for ratepayers.”
In its filing, ORS said it had no issue with Dominion Energy acquiring SCANA. However, regulators said they wanted some performance standards and conditions attached to the deal before PSC approves it.
SCE&G had not commented on the filing as of Wednesday.