Power company asked SC Supreme Court to OK higher rates. Here’s what the court said
A power company’s attempt to raise rates on its South Carolina customers failed at the Supreme Court this week, although some previously approved rate increases will still go into effect.
The S.C. Supreme Court on Wednesday upheld a decision by the Public Service Commission to limit a proposed rate increase for Duke Energy customers in South Carolina, rejecting an appeal from the energy company.
Duke serves 775,000 customers spread across the Upstate, the Pee Dee, Grand Strand and Rock Hill areas.
Duke had argued that the commission did not take into account the cost of its compliance with North Carolina environmental regulations around its coal ash ponds, and the cost of the company defending itself in several lawsuits. Duke Energy cited those concerns as the basis for a recent rate increase on both the company’s North and South Carolina customers.
The court did allow the company to recover costs associated with a now-abandoned nuclear project in Cherokee County, despite a challenge from the S.C. Energy Users Committee. That group had argued the costs were no longer recoverable after the S.C. Legislature repealed the Base Load Review Act following the failure of a project to construct two reactors in Fairfield County.
The Fairfiield County project had been launched by Santee Cooper and SCE&G, since bought by Dominion Energy.
Following a new North Carolina law tightening regulations around coal ash ponds in 2014, and numerous lawsuits brought about coal ash contamination in that state, Duke entered into an agreement with the S.C. Department of Health and Environmental Control to excavate two such ponds at the company’s South Carolina plants and re-bury the ash in specially lined landfills. In exchange, DHEC promised not to sue over ash contamination in South Carolina.
When the Public Service Commission ruled on Duke’s latest rate hike application, commissioners reduced the requested amount by 50%, discounting costs associated with North Carolina’s regulations, and denying Duke’s attempt to recover its legal fees for defending itself against lawsuits.
The PSC allowed Duke to collect $707 million in coal ash expenses instead of the $1.5 billion Duke requested, noting that costs were associated with compliance with North Carolina law that is not required by federal coal ash regulations, that actions required by the law don’t directly benefit South Carolina ratepayers, and that the law was passed in response to a massive coal ash spill to which Duke Energy had admitted criminal negligence in court.
The PSC did allow Duke to recoup costs for the shuttered Lee nuclear plant near Gaffney, finding that charging for “prudently incurred” costs was not affected by the repeal of the Base Load Review Act. That act had allowed utilities to charge customers for nuclear projects before they were completed.
Duke will recover $125 million in costs over the next 12 years. That decision was affirmed by the Supreme Court.
