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SC lawmakers remain at impasse on SCE&G rate cut

The regular session of the South Carolina General Assembly came to a close May 10 with one of the most-heated issues before lawmakers still unresolved.

The South Carolina House of Representatives and state Senate remain at odds over how much to cut South Carolina Electric & Gas Co.'s rates following the abandonment of the more than $9 billion V.C. Summer nuclear expansion.

South Carolina Electric & Gas, or SCE&G, owns 55% of the unfinished nuclear units with Santee Cooper, known legally as South Carolina Public Service Authority, owning the remaining 45%.

A conference committee comprised of House and Senate members is working to resolve the impasse on the rate reduction and other V.C. Summer-related legislation.

Lawmakers are scheduled to consider these bills when they return for a special session May 23.

The House of Representatives on April 25 voted 104-7 against concurring with the state Senate's plan to implement an interim 13% rate reduction for SCE&G customers now paying about $37 million per month for the two scrapped reactors. The House backs an 18% rate reduction that would add up to about $445 million a year in lost revenue for SCE&G.

Either version of the temporary rate cut proposed under S.B. 954 could jeopardize Dominion Energy Inc.'s offer to acquire SCE&G parent SCANA Corp. Dominion has warned that efforts to strip cost recovery tied to the nuclear project would be "insurmountable" and would be considered a material event that terminates the deal.

Lawmakers also are debating the prospective repeal of South Carolina's Base Load Review Act.

The South Carolina Senate on May 10 unanimously passed an amended version of H.B. 4375, legislation that would significantly impact the act. Because the version of H.B. 4375 passed by the Senate is not identical to the version previously passed by the House, the bill has been sent to conference committee.

The act was drafted to support construction of the V.C. Summer project and allows investor-owned electric utilities to annually request revised rates to recover financing costs for baseload plant construction. Abandonment provisions under the act also allow the utility to recover capital costs and allowance for funds used during construction if "the decision to abandon construction of the plant was prudent."

"While the Senate and House remain at odds over the new nuclear construction rate reduction amount, both bodies now appear intent on passing the other legislative items that will likely adversely affect SCANA, in our view. SCANA is not out of the woods yet," The Williams Capital Group analyst Christopher Ellinghaus wrote in a May 11 report. "The Dominion offer for SCANA as presented changes little in our outlook for an eventual outcome in South Carolina. We do not expect the deal to be relevant for much longer."