Decision expected next week in lawsuit challenging utility rate cuts

A federal judge in South Carolina is expected to rule next week whether to grant a power company's request to keep its customers on the hook for a multibillion-dollar nuclear project failure.

U.S. District Court Judge Michelle Childs is expected to rule before Tuesday, the date the rate cuts are supposed to go into effect.

Childs presided this week over a hearing in a lawsuit filed by South Carolina Electric & Gas Co. The utility is seeking to stop implementation of a law slashing its rates by 15 percent.

The Public Service Commission ordered SCE&G to drop rates by 15 percent on July 2 after the General Assembly passed a bill demanding the lower rates.

For a customer with an average bill of $200, the rollback would mean $30 of savings each month.

SCE&G told the agency they preferred for the rate rollback to begin in August but then filed a lawsuit to stop it from happening at all

The suit states the law was unconstitutional and claimed the state's General Assembly bowed to "extreme political pressure" in passing the bill.

"If the court does not grant immediate relief, SCE&G will suffer massive and irreparable harm, including millions of dollars in damages that cannot be recovered, a substantial loss of goodwill and other permanent injuries," the suit states.

SCE&G argues that it relies on the Base Load Review Act that it says was designed to encourage investment in the construction of new clean energy facilities "by promising South Carolina utilities that as long as their investments were prudently incurred, the associated costs could be recovered in their rates." The Public Service Commission authorized SCE&G to construct the nuclear power facilities and approved the rate increases SCE&G sought to recover that investment, the suit states.

The suit claims lawmakers are trying to "punish SCE&G by retroactively eliminating all rate increases since 2010 authorized under the BLRA."

"The General Assembly's actions are unconstitutional, violate SCE&G's constitutional rights and impermissibly interfere with interstate commerce," the suit states.

Lawmakers passed the bill to provide a temporary rate cut for customers of the private utility who paid billions for two nuclear reactors at the V.C. Summer Nuclear Plant that never produced power.  

Gov. Henry McMaster vetoed it as he had promised, saying the cuts were not big enough.

In vetoing the bill, McMaster asked lawmakers to stay and pass a bill that fully eliminates the 18 percent surcharge on South Carolina Electric & Gas bills because that was the only fair solution.

The veto, however, was almost immediately overridden by the House and Senate, putting a 15 percent temporary rate cut for South Carolina Electric & Gas into law.

Virginia-based Dominion Energy warned lawmakers Wednesday that passing the rate cuts for six months could cause it to pull out of a proposed merger with SCE&G's parent company SCANA Corp. 

Dominion has proposed more than $12 billion in customer benefits and another $19 billion in economic activity. The benefits include a cash payment of $1,000 to the typical residential customer, Dominion has said.

If the merger goes through, Dominion has also said it would write off $1.7 billion in losses tied to the V.C. Summer Nuclear project, saying that loss would never be collected from customers. 

SCE&G and state-owned utility Santee Cooper abandoned the V.C. Summer Nuclear Station project last year following the bankruptcy of contractor Westinghouse. SCE&G ratepayers have already paid more than $2 billion toward the project.

Copyright 2018 WCSC. The Associated Press contributed to this report. All rights reserved.

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