SCE&G files lawsuit to stop rate cuts approved by lawmakers

Updated: Jul. 2, 2018 at 12:58 PM EDT
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COLUMBIA, SC (WCSC) - South Carolina Electric & Gas filed a federal lawsuit to block a temporary rate cut from taking effect.

The suit was filed Friday in the U.S. District Court asking for an injunction to prevent a 15 percent cut for SCE&G customers. State lawmakers passed the bill that would order the Public Service Commission to, in turn, order SCE&G to reduce rates.

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.

"My position has not changed. Because this bill does not fully protect the ratepayers, I am returning the same without my signature," McMaster said in the veto message. "By promptly doing so before legislators leave town, my aim is to encourage the General Assembly to remain in Columbia and to provide them ample time to deal with this extraordinary matter in a just and equitable manner."

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.

Late Thursday, Dominion Energy spokesperson Kristen Beckham reacted to the veto override:

SCE&G customers have spoken loud and clear: They like the Dominion Energy proposal that includes more than $12 billion in customer benefits and another $19 billion in economic activity. Customers want stability, a permanent rate cut of 7%, and $1.3 billion in cash payments to SCE&G's electric customers – equal to $1,000 for the typical residential customer.

Unfortunately, legislators in Columbia didn't hear them. As a result, it looks like a permanent solution—with refunds and rate cuts—will be delayed until later this year as the legal system sorts out these matters.  We certainly hope this will occur as soon as possible for the sake of SCE&G customers.

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. As lawmakers worked on the proposed legislation ahead of votes in the House and Senate, Thomas F. Farrell II, the chairman, president and CEO of Dominion Energy issued a statement accusing the state legislature of "playing a high-stakes game where they are gambling with the money of customers and taxpayers."

"Legislators are risking cash payments to SCE&G's electric customers of $1.3 billion – equal to $1,000 for the typical residential customer – and a permanent rate reduction of 7 percent," Farrell said in Wednesday's statement. "They are jeopardizing total customer benefits of more than $12 billion and another $19 billion in economic activity. And, they are promoting continued turmoil for South Carolina's energy and business future. All of this for a few headlines and a temporary rate reduction that has good odds of being overturned in court. It is a disappointing and short-sighted action that is counter to the best interests of South Carolina and its people."

SCE&G said before the bill passed that they would likely sue because it thinks only regulators can set electric rates.

Under a proposal announced in January, Virginia-based Dominion Energy would issue refund checks of up to $1,000 to SCE&G customers after it purchased SCANA through an all-stock merger. The refund amount would be based on the amount of electricity used in the 12 months prior to the merger's close.

Dominion 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.

This is a developing story. Check back for updates.

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