As the legislature debates Santee Cooper’s future, criticism has been levied against NextEra Energy’s offer to buy the state utility.
Selling Santee Cooper to NextEra would relieve ratepayers of a crushing $6.8 billion nuclear and other debt, give back to customers the money already paid for the nuclear project debacle in Fairfield County and lower rates.
Some have accused NextEra’s proposal of having the same problems as the Base Load Review Act (BLRA), the 2007 law that enabled SCE&G, and its partner Santee Cooper, to run up billions in cost overruns and years of delay in the failed nuclear construction effort.
I and my organization, the South Carolina Small Business Chamber of Commerce, have significant experience with the BLRA.
In August 2015, I held a press conference with AARP-SC to first raise our concerns about the BLRA.
In July of 2016, my organization co-founded the Stop The Blank Check Coalition. Our mission was to propose amendments to the BLRA so that there would never be a repeat of the SCE&G financial disaster.
Our amendments turned out not to be necessary due to the nuclear project being abandoned in July 2017, and the legislature essentially ended the BLRA for the future.
Now the ghosts of the old BLRA are being resurrected to tarnish NextEra’s purchase proposal.
Here are accusations and the facts.
The BLRA did not protect consumers from being responsible for SCE&G cost overruns that ended up being billions before the project was abandoned.
Under NextEra’s proposal the utility will recover no construction costs that exceed their requested $2.3 billion for multiple projects.
The BLRA allowed SCE&G to increase rates every year for the project while the nuclear plants were being constructed. Under NextEra’s proposal, consumers will not pay for construction until projects are up and running.
The BLRA gave SCE&G the legal right to recover all its costs for the nuclear project – including almost another 10% for SCE&G profits – even if the project was abandoned for any reason.
Fortunately, the utility was sold to Dominion Energy which absorbed much of SCE&G’s $5 billion nuclear construction debt but ratepayers are still on the hook for billions.
Under NextEra’s proposal, the utility would not be able to recover any construction costs for an abandoned project unless the reason is due to changes in federal laws or regulations that would legally prohibit the project from being completed.
The NextEra critics have raised some other BLRA-related concerns that NextEra has should address.
One of the amendments proposed by our STBC Coalition was to have the SC Office of Regulatory Staff (ORS), which represents the public’s interest in utility matters, serve as an advisory-only party to all utility contractual negotiations and decisions under the BLRA.
While NextEra’s project costs to be recovered from the consumers are capped, adopting this amendment would give the public more assurance that construction costs are appropriate.
Finally, the legislature should consult with the Public Service Commission and ORS before approving the Return on Equity rate – in other words, profit – requested by NextEra.
Simply put, the NextEra proposal is not the BLRA reincarnated.
Mr. Knapp is the president/CEO of the South Carolina Small Business Chamber of Commerce.