COLUMBIA, S.C. — A South Carolina utility can stay afloat without collecting much of the $37 million it’s been charging customers monthly to pay for a now-defunct nuclear construction project, according to a financial analysis commissioned by the state Senate.
The study by Washington, D.C.-based consulting firm Bates White, reported Tuesday by the Post and Courier of Charleston , shows lawmakers can temporarily cut South Carolina Electric & Gas Co.’s electric rates by at least 13 percent without the company falling into financial ruin. The findings were similar to a study conducted by a bankruptcy attorney on behalf of the Office of Regulatory Staff, the state’s utility watchdog.
The utility’s 700,000 customers currently pay 18 percent of their bills for a pair of unfinished reactors at the V.C. Summer Nuclear Station. Thousands lost their jobs last summer when SCE&G and project co-owner Santee Cooper shuttered the project following the bankruptcy of lead contractor Westinghouse.
According to the study, SCE&G could weather the 13 percent rate cut simply by eliminating quarterly dividends to its investors. Last year, SCE&G passed along $319 million in dividends to its investors, including $120 million directly tied to customer payments for the partially built reactors.
“We conclude that one way that SCE&G could absorb an interim rate reduction of at least 13 percent is by reducing dividends by $319 million – the actual amount of dividends paid by SCE&G to SCANA in 2017,” according to the report. “Dividend reductions are the expected response by any corporation to financial difficulties since equity investors take on that risk in exchange for the opportunity to earn a higher return.”
The cut, the newspaper reported, would drop typical home power bills by $19 per month while regulators and courts hash out a permanent solution to the failed project, toward which SCE&G customers have already paid more than $2 billion.
House lawmakers voted two months ago to halt SCE&G’s nuclear charges. The Senate delayed movement on that proposal after the utility’s lobbyists warned of SCANA’s impending bankruptcy, and some senators demanded a more detailed study.
If the Senate acts, the Legislature would suspend SCE&G’s nuclear charges only temporarily. State regulators will ultimately decide whether the company or ratepayers foot the reactors’ bill.
The Senate could begin debating a rate cut as early as Wednesday. A partial rollback would need approval of both the House and Gov. Henry McMaster.
A SCANA spokeswoman didn’t immediately return a message seeking comment. For months, SCANA has warned a rate rollback could foreshadow bankruptcy, misaligning its balance sheet and cutting credit lines.
Information from: The Post and Courier, http://www.postandcourier.com