By Lynn Teague
The CEOs of Dominion, Santee Cooper, and Duke Energy want South Carolina to abandon very important elements of the system of utility regulation established after the V.C. Summer collapse.
They spoke on Aug. 22 at the first meeting of the Senate Special Committee on South Carolina’s Energy Future, a committee charged with developing a bill to address the state’s energy needs.
No one denies that South Carolina is growing and needs energy to sustain that growth.
However, our energy utilities enjoy a monopoly. The state guarantees not only that they can sell their product but that they can do so at a reasonable profit.
In return, it is the legal and ethical responsibility of the state to protect the public interest, which includes economic development but also the concerns of captive ratepayers and of those who argue for the protection of the environment.
Sen. Shane Massey, co-chair of the committee, made it clear that he understands this. We hope other committee members do as well.
Utilities would like us to forget the past. However, as William Faulkner observed, the past is not dead, it’s not even past.
We are still paying the heavy cost of a history of weaker utility oversight that was heavily reliant on personal relationships. Before reforms following the V.C. Summer project collapse, legislators on the Public Utilities Review Committee (PURC) publicly expressed great confidence in Kevin Marsh, SCANA CEO, and others on his team.
They did not deserve that trust and were later found guilty of federal crimes in their conduct of the project.
We should not have needed this brutal example to prove the inadequacy of this approach, but we got it.
Personal trust was and is no way to run a responsible regulatory system.
The utilities are now seeking to replace effective protections enacted after V.C. Summer with a weak regulatory regime and, again, a lot of personal trust.
At the committee meeting last week, the only assurance that we were offered in case of the failure of a project under a gutted regulatory system was that Dominion SC CEO Keller Kissam would resign and return to his family home on Halfway Swamp.
Most of the people of our state would find that promise irrelevant. His resignation would do nothing to
compensate the public for poor performance or high rates.
We must have a regulatory system that is impersonal, evidence-based, and fair to all.
A return to provisions like those of the Base Load Review Act (BLRA) would not achieve this. It is undoubtedly true that reducing risk for lenders and utilities by again transferring financial risk to ratepayers would lead to lower interest rates.
But those risks are real (lenders research their risks thoroughly) and ratepayers should not be required to bear them, as the BLRA has made them do in the case of V.C. Summer.
Those who get the profits must bear the risk. If they don’t, the moral hazard to flout those risks is high, as we have discovered through bitter experience.
Furthermore, the role and power of the Office of Regulatory Staff (ORS) and the Public Service Commission (PSC) must not be compromised.
As ORS staff have often noted, their current mission is not one-sided. It is to fulfill “the concerns of the using and consuming public with respect to public utility services, regardless of the class of customer, and preservation of continued investment in and maintenance of utility facilities so as to provide reliable and high-quality utility services.”
Asking them to return to the role of “protecting the fiscal integrity of utilities” asks for a return to impossibly conflicting demands.
Weakening the current role of the PSC should also be off the table. Their current mission requires that they consider all sides as they “regulate just and reasonable rates and service of public utilities in the state of South Carolina” through an impartial and thorough quasi-judicial process.
That is as it should be.
In coming weeks, the Senate committee will hear from a wide range of interests. They may decide to recommend adjustments to existing law. Any such changes should be minor.
We ask that the Senate committee develop a bill that will continue our current evidence-based regulatory system that so wisely fosters development of a sound energy industry in South Carolina while protecting users from the potential abuses of a monopoly system.
