How to save 600 jobs at SCANA and SCE&G
Note: This was originally submitted to The Lexington Chronicle & Dispatch News and will run in their Nov. 15, 2018 issue. It was used with their permission
When SC Electric & Gas decided to abandon its nuclear construction project a year ago, we lost about 5,000 workers. Now up to 600 SCE&G employees, most at its Cayce headquarters, are in danger.
Utility rate and planning consultant Lane Kollen told Public Service Commissioners last week that about 1/3rd of SCANA service employees could be eliminated if they approve Virginia-based Dominion Energy’s bid to buy SCE&G’s owners. Kollen, an Office of Regulatory Staff witness with over 40 years utility industry experience, based his estimate on previous Dominion buy outs of other utilities.
The possibility of Lexington County losing up to 600 jobs should come as a shock to county lawmakers. They have been told that without Dominion saving SCE&G, the locally-owned utility will file for bankruptcy with terrible consequences.
Fortunately, after the first 2 weeks of testimony at the Public Service Commission, it is clear the SCE&G/Dominion proposals to resolve the nuclear debacle are falling out of favor with the Commissioners.
SCANA CEO Jimmy Addison testified that the ORS and PSC were not given internal analyses and the critical $1 million Bechtel Corp analysis of massive problems. Those could take years longer at a cost of hundreds of millions more than disclosed. He admitted SCE&G intentionally hid critical information that could have led to the project being abandoned years ago.
Now it is clear that the PSC will choose one of the ORS’s proposed solutions. One proposal would roll back SCE&G electric rates another 5% over the 15% already in place this year thanks to the legislature. Both Dominion proposals would result in a rate hike over current high rates.
Even if this ORS proposal is approved, Dominion might still buy SCANA and drastically eliminate SCE&G’s workers.The question is, will the Lexington County legislative delegation push for an ORS proposal that could save customers more money, keep Dominion from buying SCANA and avoid bankruptcy, too? 17 states have used a type of financing called “securitization” to let utilities affordably recover costs such as those with SCE&G’s abandoned nuclear project.
Securitization means lower costs due to less risk. The amount needed would be lower since SCE&G could not add a 10.25% Return on Equity it charges ratepayers and avoids paying income taxes on financing costs, saving ratepayers even more money. The Florida Public Service Commission approved securitization to recover costs of a nuclear power plant that Florida Power & Light had abandoned.
If SC lawmakers made securitization legal to be used here, ratepayers would gain a larger rate cut, SCANA could remain a locally-owned corporation and the jobs of up to 600 SCE&G workers could be saved.
SC legislators must quickly show the PSC they aim to pass a law to allow securitization before the commissioners make their ruling by Dec. 21.
Knapp is CEO of the SC Small Business Chamber of Commerce and an intervenor in the PSC hearings.
NOTE: Letters to the editor are the opinion of the author of that letter or article.