Dominion Energy officials are waging an all-out charm offensive in South Carolina to convince residents that their proposed merger with SCANA will benefit hundreds of thousands of SCE&G ratepayers. They’re even offering to cut $1,000 checks to each and every customer.
They say it’s the best deal South Carolina ratepayers are going to get.
And they may be right, but their offer would still leave every SCANA ratepayer on the hook for thousands of dollars to pay for two nuclear reactors that will never be switched on.
Meanwhile, SCANA and Dominion shareholders would continue to benefit from the flawed nuclear reactor deal that got the state into this mess to begin with. It’s enough to cause a monthly meltdown for the ratepayer as the utility bill comes due.
SCANA shareholders earned about $350 million last year, even as the company effectively wrote off its share of a $9 billion nuclear failure. Customers financed that shareholder windfall in part through the 18 percent of their monthly bills they still pay for the abandoned reactors.
And it’s going to be more of the same if the Dominion deal goes through. Meanwhile, South Carolina customers will continue to pay some of the highest electric rates in the country.
At least there’s that $1,000 check. But the actual dollar amount is based on how much customers spent on electricity over the past year, so those who responsibly did more to conserve energy will get proportionately less. For those who bought LED lightbulbs and used the air conditioner sparingly, the check will be a lot smaller. Tough luck.
Of course none of this addresses the fundamental problem that’s at the root of this mess.
Utilities like SCANA and Dominion operate as monopolies that provide an essential service. Customers can’t reasonably refuse electricity and they can’t shop around for the best price.
But not only do SCANA and Dominion get to serve a captive market, they get to make a virtually guaranteed return on investment, unlike regular businesses that have to compete in the marketplace. In SCANA’s case that return on investment is more than 10 percent, and the more money they spend, the better — fiscal responsibility be damned.
Utility officials contend that the real rate of return is closer to 5 percent, but that’s still a lucrative payoff for shareholders. Imagine a savings account that offered a 5 percent interest rate. It’s currently unthinkable.
And by rewarding expenditures — the more a utility invests in infrastructure, the larger dollar total it’s allowed to earn — the regulatory environment encourages waste and excess. Kind of like taking on a multibillion-dollar nuclear project rather than investing in something more modest like a solar farm.
The state Legislature made it even worse in 2007 with the Base Load Review Act, which further reduced financial constraints on SCANA, and led to the nuclear disaster.
Meanwhile, SCANA has a permanent customer base and a compliant regulatory board that SCANA officials have plied with lavish conference vacations and dinners, according to Post and Courier news reports. Whenever they need more cash, all they have to do is ask for higher rates. It works every time.
So what can South Carolina ratepayers do? Not much.
Forcing SCANA to fully atone for its mistakes would almost certainly cause economic chaos and end up costing customers more money in the long run anyway. It could even have ripple effects by chasing away new business investment in the state.
Right now, well-meaning, righteously angry legislators with near-zero utility industry experience are taking on some of the most powerful corporate lawyers and wiliest business leaders around. It’s not a fair fight.
Besides, the utility companies will almost certainly win either way. And they know it. They’ve always known it.
Whether or not the deal goes through, shareholders will profit, Dominion will expand its energy empire, SCANA will escape virtually all responsibility for an economic disaster, $9 billion worth of steel and concrete will crumble in Fairfield County. And South Carolinians will pay the price.
We should be outraged. We should demand an effort to remake the system that got us into this crisis and give ratepayers more of a say.
The only sure recourse? Use as little electricity as possible. Invest in upgrades that conserve energy. Consider solar power.
SCANA will still get our money each month. But we should give them as little as possible.
Ed Buckley is an editorial writer for The Post and Courier.
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