Powerful State House panel behind blueprint for South Carolina’s nuclear push

January 17, 2018

Investigative Reports

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PURC Report

By RICK BRUNDRETT

Nearly a decade ago, an influential state legislative committee quietly released a report advocating a quick expansion of nuclear energy in South Carolina, claiming, for instance, the small state might face power shortages and blackouts by 2016.

Those dire predictions didn’t come true.

As the now-abandoned V.C. Summer construction project in Fairfield County was being planned, the State Regulation of Public Utilities Review Committee (PURC) in its Energy Policy Report claimed, among other things, that more nuclear energy was needed because many South Carolinians were illiterate and likely couldn’t understand energy conservation measures; were too poor to afford higher-priced, more energy-efficient appliances; or lived in older mobile homes that couldn’t be made more energy-efficient.

Although not widely known, the 21-page document served as a thinly veiled policy statement for the expansion of the nuclear industry in the Palmetto State – which already has four operating nuclear plants.

PURC’s rationale at the time was that expected new federal regulations under the incoming Obama administration would significantly drive up the cost of electricity generated by coal-fired plants, disproportionately hurting poor South Carolina ratepayers.

Yet those same ratepayers would face the financial pain of nine rate increases over the years for the V.C. Summer project – hikes approved by the state Public Service Commission, which is mainly controlled by PURC.  SCE&G customers collectively have paid more than $1.7 billion for the failed nuclear project.

The Nerve in July reported, citing a recently released study by the personal-finance firm WalletHub, that South Carolina’s average monthly housing electricity costs are the highest in the nation.

“It sounds like it (PURC) crossed over into the promotional rather than (maintaining) their regulatory or oversight role,” said Tom Clements of Columbia, an activist with the environmental group Friends of the Earth, when contacted Tuesday by The Nerve about the PURC report. “It was a time when everyone was swept up into this nuclear renaissance.”

The PURC report “helped destroy the credibility of that committee,” added Clements, whose organization and the Sierra Club, another environmental group, earlier Tuesday announced the filing of a formal protest with the PSC over plans by Cayce-based South Carolina Electric & Gas and Virginia-based Dominion Energy, which has proposed a merger agreement with SCE&G’s parent company, SCANA Corp., to recover costs from the failed V.C. Summer project.

Created in 2004, PURC is a 10-member committee made up of three S.C. House members, three state senators and four non-lawmakers. The appointments are controlled by the House Speaker and Senate Judiciary Committee chairman.

When it comes to the regulation of private utilities in South Carolina, PURC exerts tremendous control, screening and nominating the seven-member Public Service Commission, which sets utility rates –including rate hikes, allowed under a 2007 state law, for the failed $9 billion V.C. Summer project.

Two legislative investigatory committees created over last summer in the wake of the nuclear project’s collapse include the six PURC lawmakers, as The Nerve reported last week.

PURC members not only nominate PSC candidates, but they also are charged with annually evaluating them individually and as a group. In addition, PURC controls the hiring and oversight of the executive director of the state Office of Regulatory Staff, which, among other duties, is supposed to represent ratepayers’ interests.

Power shortages, blackouts predicted

The Energy Policy Report published by PURC started with a September 2008 letter from then-S.C. Senate President Pro Tempore Glenn McConnell, R-Charleston and that chamber’s most powerful lawmaker at the time.

His letter came the year after the Legislature had quietly passed the Base Load Review Act, which allowed the PURC-controlled PSC to approve rate hikes for the V.C. Summer project before the two planned reactors were finished, as The Nerve reported in 2012.

“He (McConnell) was a big cheerleader for the Base Load Review Act,” Clements recalled.

McConnell in his 2008 letter directed Sen. Thomas Alexander, R-Oconee and the longtime PURC chairman, to have PURC conduct a “formal inquiry into how these pending federal energy policies might affect our State,” according to the PURC report.

As the Senate Judiciary Committee chairman, McConnell controlled the appointments of Alexander and four other members of PURC.

The PURC report’s research was done by the PURC-controlled Office of Regulatory Staff (ORS), which has been on the defensive publicly since the V.C. Summer debacle. The PURC report was published without fanfare following two low-key public hearings in December 2008 and January 2009.

PURC painted an urgent scenario: Alternative energy forms, including nuclear energy, needed to be expanded quickly in South Carolina because the federal government under the incoming Obama administration was planning a serious push nationwide to reduce greenhouse gases produced by carbon dioxide emissions.

That included emissions from coal-fired electric plants, which according to PURC’s report, accounted for more than 61 percent of all electricity produced in South Carolina at the time of the report. Nuclear power generated 31 percent of the state’s electricity, the report said.

“There are ongoing plans to build additional nuclear facilities to meet South Carolina’s growing electric needs,” PURC said without specifically mentioning the V.C. Summer expansion project. “Although some parties oppose nuclear power generation, we believe that, in order to meet the electric needs of South Carolina with limited GHG (greenhouse gas) emissions, nuclear must be considered a viable option.”

“For at least the immediate future,” according to the report’s executive summary, “we must rely on the growth of the nuclear energy industry in this State to ensure that reliable, affordable electricity is available to all of our citizens. To attempt to resist change or merely stand on the sidelines hoping for a delay in the inevitable is no longer an option.”

Among other things, PURC recommended that any “federal initiative should consider nuclear power generation a ‘GHG-emission neutral’ source of electricity.”

The report also said, citing research by the ORS, that South Carolina’s energy-reserve margins could fall to below zero in 2019, warning that the state could “face power shortages and blackouts by 2016, if not sooner,” without “additional generation.”

None of the predicted bad outcomes occurred, however.

S.C. residents too poor, too stupid?

The PURC report also warned that the expected increase in electricity costs stemming from the planned federal crackdown on carbon dioxide emissions could “put some South Carolinians in the desperate position of having to choose between paying for food and medicine or paying their electric bill.”

In downplaying energy conservation measures, the report said given that South Carolina ranked 40th in the nation in median household income, many residents couldn’t afford to “take energy-savings measures, such as insulating homes or buying more expensive, yet more efficient, electric appliances.”

It also noted more than half (56 percent) of the state’s population fell within either “severe (Level 1) to moderate (Level 2) ranges of illiteracy,” and that if residents “cannot read or write, they will have a difficult time comprehending information about energy efficiency and conservation.”

Furthermore, the state led the nation in the percentage (18.2 percent) of the population living in manufactured homes, and that while many newer such homes have “improved energy efficiency,” many residents live in “older manufactured homes that typically are not easily modified,” the report said.

South Carolina ranked 5th in the nation in annual electricity consumption by residential customers, according to the report, which pointed out that air conditioning is heavily used because there are “many hot days in South Carolina.”

Although PURC conceded the state will continue to “rely on coal to generate the majority of the electricity South Carolinians consume” for “at least the next two decades,” it claimed the “majority of South Carolinians are in favor of nuclear energy,” citing a 2008 poll by the University of South Carolina of four Midlands counties, and separate customer surveys in 2008 by SCE&G and Duke Energy Carolinas.

“Given this strong public support for additional nuclear capacity, and South Carolina’s history and success as a leader in satisfying a substantial portion of energy demand through nuclear power, we recommend that new nuclear capacity be an integral priority in satisfying future demand while reducing GHG (greenhouse gas) levels in South Carolina,” the report said.

And PURC members stressed there was no time to waste.

“Every day that we wait, South Carolina’s ability to provide electricity in an affordable, reliable, and environmentally responsible manner is imperiled,” the report concluded.

Brundrett is the news editor of The Nerve. Reach him at 803-254-4411 or rick@thenerve.org.

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