Proposed Utility Regulatory Reform

2017 saw a disastrous situation at the V. C. Summer Plant (the Westinghouse bankruptcy and the abandonment of the nuclear plants construction by SCE&G and Santee Cooper).  It is clear that other reform efforts are needed beyond addressing the BLRA. On September 13, 2017, the Coalition proposed additional, necessary reforms essential to protect the public in future utility regulatory matters. The Coalition also advocated for a desired outcome in the V.C. Summer Plant crisis.

Below are the recommendations for the Stop the Blank Check Coalition:

1) We have supported the amendments to the Base Load Review Act (BLRA) provided by H.4022 in an effort to keep future nuclear plant construction projects on budget and on schedule while protecting ratepayers.  However, given Duke Energy’s decision not to build a nuclear plant in South Carolina, repeal of the BLRA is a sensible measure.

2) Santee Cooper’s public status shields it from the needed regulatory oversight given to private utilities and it also lacks proper oversight by elected leaders. The state agency must be made more accountable through the following:
a) governor’s ability to remove directors at will, and
b) regulation under the same bodies, laws and rules as privately owned
utilities.

3) We support reform of the regulatory process for all utilities to insure protection of ratepayers and the general public interest. The following are our initial recommendations for reform, in addition to inclusion of Santee Cooper under the regulatory umbrella:

a) No person should serve on any body associated with either shaping or carrying out the regulatory process if they, their family or a business with which they are associated has a business relationship with or receives any form of income or compensation from a state-regulated utility, an affiliate of such a utility, or an association representing such utilities.

b) We support gubernatorial appointment of Public Service Commission (PSC) members. We would consider support of public election of PSC members only if public financing were provided, with a prohibition on any private funding from any source.

c) We do not support shifting responsibility for representing the interests of utility ratepayers to a consumer bureau. Utility law is complex and specialized, and ORS is far better prepared to address the concerns of the public than a general consumer-interest agency would be. A consumer advocate within ORS would be useful, but only if the agency as a whole does not have other mission elements that conflict directly with the interests of ratepayers (see “d” below).

d) The Office of Regulatory Staff (ORS) should not be responsible for representing the financial “integrity” of utilities as an explicit element in its mission. The ORS mission should be to represent the interests of ratepayers and the general public interest. The financial health of utilities will remain a consideration to the extent that it is an issue in addressing the general public interest, but the protection of utility shareholders, per se, is the responsibility of the utilities themselves, not the government.

e) The ORS Executive Director is responsible for making decisions that must be grounded in an objective and unbiased assessment of complex data. Those decisions may be politically sensitive, but the ORS should not be subject to political pressures. We therefore draw attention to the requirement of Act 175 of 2004, §1-3-240(C)(12), which provides that removal of the Executive Director should be only for cause, not at will.

f) The Public Utility Review Committee (PURC) raises concerns that should be addressed. There is inadequate protection against conflicts of interest within the existing body. However, we more broadly question whether PURC is appropriate or needed. It represents an unfortunate blurring of lines between legislative and executive functions. The Governor, as head of the executive branch of government, should conduct personnel evaluations associated with both PSC and ORS. The legitimate interest of the General Assembly in whether PSC and ORS function as intended should be addressed through the same committee oversight process that the Senate and House use to review other executive agencies. PURC itself should be disbanded.

4) Regulated utilities should be prohibited from making campaign contributions to individual candidates, parties, PACs or caucuses.

5) We support efforts to hold SCE&G and SCANA shareholders responsible for the incurred construction costs of the now abandoned nuclear plants at the V.C. Summer Nuclear Station instead of ratepayers—some of whom are elderly, disabled or live in poverty.  SCE&G should not be allowed to seek to recover construction costs under 58-33-280K of the BLRA. State regulators must consider evidence of imprudence and disallow passing costs on to ratepayers that were incurred through imprudent management. At present we question in particular SCANA’s failure to demand from contractors sufficient information to independently evaluate project progress and challenges and make appropriate decisions on an on-going basis. However, we await further information that bears on the failed management of V. C. Summer.

6) We support development of an energy plan for South Carolina that reflects protection of the public interest in a time of rapidly changing technology through a strategy that gives South Carolina diversity of energy sources and flexibility to move forward toward an affordable sustainable future.