SC Progressive Network Executive Director
Gov. Henry McMaster has called for legislative hearings into what may be the biggest theft in state history, a multi-billion dollar nuclear disaster.
I can save them some time, because I witnessed the crime first-hand and know who pulled off the heist.
Those blaming SCE&G for shaking down consumers are chasing the wrong culprit. SCE&G is an investor-owned monopoly run by large banks and investment funds whose mission is to make money for its stockholders. It was no surprise, then, that they took advantage of an opportunity to socialize the risk and privatize the profit of building nuclear reactors. That’s what profit-driven corporations do.
South Carolina is one of two states that allow for-profit utilities to charge consumers for electricity they may never get. It wasn’t always this way.
In 1984, after five years of hearings, the VC Summer reactor in Jenkinsville was making electricity, and consumers could finally be billed. The SCE&G reactor was the last to be licensed under the old rules. Nukes were too long, risky and expensive a venture until President George W. Bush championed the Energy Policy Act of 2005. The Act provided a generous package of subsidies to build new reactors, including loan guarantees, federal risk insurance, and tax credits.
Still a risky venture, energy industry groups pushed for federal regulations that would streamline the licensing of reactors. In 2007, the Nuclear Regulatory Commission answered their prayers by offering combined construction and operating licenses (COL). The NRC received 18 applications from utilities around the country for the new one stop license, but only two utilities stayed in the game.
So why were reactors built only in South Carolina and Georgia?
In 2007, a bill was introduced in the SC state legislature to let SCE&G charge customers in advance for future nuclear electricity. Georgia followed suit a few years later. Building the nuke, referred to as construction work in progress (CWIP), had previously been a financial burden on the stockholders who stood to benefit from the investment. The South Carolina bill was championed by Rep. William Sandifer and Sen. Tommy Moore, the Democratic candidate for governor that year.
At the time, Sandifer was a Task Force chair of the American Legislative Exchange Council (ALEC), a corporate lobbying group promoting state legislation to maximize corporate profits. The “Base Load Review Act” was titled as a consumer friendly law to “TO PROTECT SOUTH CAROLINA RATEPAYERS BY ENHANCING THE CERTAINTY OF INVESTMENTS IN THE INFRASTRUCTURE OF ELECTRIC UTILITIES.”
The bill – written by utility lawyers and lobbyists – ensured that SCE&G would get a set percentage of return based on its investment. SCE&G is currently guaranteed a healthy 10.5 percent on top of what they spend, so the more they spend, the more they make. The bill also holds the power company harmless if they “abandon the project after a prudency determination” by the Public Service Commission. The bill was sent to the floor without a public hearing.
In a perfect example of a done deal – and with rare expedience – the House introduced the bill on April 17, 2007, had a second reading on the 18th, and final reading on the 19th. The bill passed the House with a 104-6 vote, with progressive legislators voting in favor and only a small bipartisan group voting no.
Sen. Moore drove the bill in the Senate, and received $74,750 from electric companies that year. He also got the maximum $7,000 contribution from the law firm SCE&G hired to “secure” the legislation. The bill passed the Senate with unanimous consent without a roll call vote.
Before the SC Progressive Network, there was GROW, which had a long history of challenging the power company. This poster is from 1979.
The lobbying frenzy to promote the 2007 bill is a case study in following the money. Sold as a way to save consumers from a big rate hike at the end of construction, SCE&G’s electricity bills now include nearly a 20 percent increase to pay for the boondoggle.
Not unrelated, electric utilities and the nuclear industry made 619 contributions totaling $514,955.92 to lawmakers in the legislative session leading up to the vote. (See 2006 utility contributions to state house candidates.)
The McNair law firm, namesake of former Democratic Gov. Robert McNair, still boasts about delivering the vote for its corporate clients on its web site. “Working on behalf of a Fortune 500 energy-based holding company that serves customers in South and North Carolina and Georgia, McNair helped secure utility legislation from the South Carolina legislature in 2007. Called the Base Load Review Act, this law is intended to allow a utility to recover prudently incurred capital and operating costs associated with new nuclear or coal-fired base load electric generating facilities larger than 350 megawatts.”
The McNair firm, with over 100 lawyers, gave $64,000 to candidates who voted for the bill that SC&G paid the firm to work on. Since lobbyist are prohibited from making donations to candidates, the firm’s work for the power company, and their donations to candidates, was characterized as legal work. There are no public records on how much money SCE&G gave to the McNair firm. (See 2006 McNair Law Firm contributions to State House candidates.)
The villain in this billion-dollar theft isn’t the for-profit corporation or their lawyer/ lobbyists; it’s the politicians who allow money to corrupt public policy.
To discover the guilty parties, the governor and state lawmakers need do no more than look in the mirror.
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As attorney general in 2007, Gov. McMaster received the maximum campaign contributions from both SCE&G and the McNair firm. We hope he will support legislation the SC Progressive Network is promoting for more transparency in campaign finance disclosures and public financing for the office of attorney general.
Brett Bursey was the sole intervener in the five years of federal licensing hearing for the original VC Summer reactor from 1979-1984. Without his intervention, the SCE&G reactor would be the only nuclear generating facility ever licensed without public hearings.
The National institute on Money in State Politics contributed research for this piece. The SC Progressive Network contributed the original data for its searchable database of SC legislative and constitutional office candidates since 1998. You can find who your legislator is getting money from by clicking here.