A Nuclear Energy Meltdown Scrambles Southern Politics
South Carolinians have some of the highest electricity bills in the country, thanks in part to nuclear energy
BY ANDREA COOPER | AUG 30 2018
REVEREND LEO WOODBERRY CLUTCHED the pulpit, his voice rumbling toward the people gathered in the basement theater at Little Rock AME Zion church. Around 75 men and women wearing everything from stylish dresses to blue jeans and T-shirts sat in rapt attention.
“Talk to your friends,” Woodberry implored, wearing a “Justice First” T-shirt and a baseball hat. “Your neighbors, your commissioners, your mayors. Tell them we are ready right now to move away from fossil fuels. We’re ready to make our cities 100 percent renewable!”
People clapped, whistled, and cheered “Yes!” and “Amen!”
Woodberry was on his Justice First Tour in Charlotte, North Carolina, 100 miles from his home in Florence, South Carolina. The environmental activist had come here to proclaim that the moment had arrived for the climate change, women’s rights, immigrants’ rights, criminal justice reform, and marriage equality movements to unite for a common cause: opposing an extractive economy “based on death and destruction and sickness.”
That same economy is responsible for an unprecedented energy and financial disaster in Woodberry’s home state: A $9 billion nuclear project—once heralded as part of a U.S. nuclear revival—has been abandoned after years of delays and mismanagement. One of the South Carolina utilities responsible for the colossal failure has billed its customers $37 million each month to recoup costs.
The crisis has scrambled energy politics in a deep-red state, drawing together divergent groups of civic leaders, elected officials, and environmental advocates in a collective effort to redress the damage done and demand a shift to clean energy.
Woodberry is one of the most prominent leaders in that coalition. A longtime opponent of fossil fuels, he runs an economic development group that supports training for solar energy jobs, helping lower-income people develop skills and take advantage of new opportunities in rural communities. He recently completed his tour in nine southern states, in which he called for clean, renewable energy for all; a resolution to protect forests; and an environmental bill of rights in every state.
The way the Base Load Review Act was set up, the more the project cost, the more money the utility made.
He knows that progress can be messy and democracy slow. But the uprising for the new-energy future Woodberry envisions has already begun in South Carolina—and it all started with an innocuous-sounding law that turned into a boondoggle for residents statewide.
SOUTH CAROLINIANS HAVE SOME OF the highest electricity bills in the country because of a decision made in 2007. That year, the state’s General Assembly passed the Base Load Review Act, allowing utilities to charge customers for the “prudently” incurred capital costs of new power plants as the plants are being built.
The bill zipped so swiftly through the South Carolina House and Senate that conservation groups were caught off guard. There was virtually no public discussion before the bill landed on then-governor Mark Sanford’s desk. Sanford had five days to either sign or veto the legislation, or it would become law.
Bob Guild, a longtime attorney for the Sierra Club and Friends of the Earth in South Carolina, first heard about the bill during that five-day period, while meeting with Sanford about green jobs. Sanford, a Republican, disliked this new legislation on free-market grounds. He wanted nuclear power to rise or fall without government help. But he told Guild that the legislature would override his veto in minutes.
The Base Load Review Act ended up going into effect without the governor’s signature, as allowed under South Carolina law. Utilities, it’s worth noting, have been a prime source of cash for South Carolina legislators’ campaigns.
Two utility companies soon revealed a plan to expand the Virgil C. Summer Nuclear Generating Station in Fairfield County, about 45 minutes northwest of Columbia. The plan was to build two new nuclear reactors, among the first to be constructed in the United States in decades, a move intended to revitalize the industry. The majority owner of the project would be SCE&G—South Carolina Electric & Gas—a subsidiary of Scana Corporation. (SCE&G serves more than 700,000 ratepayers.) The remainder would belong to Santee Cooper, a state-owned and -financed utility that sells electricity to rural co-ops.
Westinghouse Electric Company, the lead contractor on the project, promised to use the latest whizbang equipment and a new, proprietary design called the AP1000. Westinghouse’s website touted the AP1000 as “the safest and most economical nuclear power plant available,” one that “improves upon the established technology” of major components such as pressurizers and reactor vessels. South Carolina would have some of the first AP1000 reactors in the world. But Westinghouse resisted giving substantial details about how the project’s construction would stay on track, saying it had to protect its intellectual property.
Guild argued before the South Carolina Public Service Commission, which regulates utilities, that the reactors weren’t needed or prudent, especially given the nuclear industry’s poor track record on cost overruns, safety, waste storage, and security expenses to protect the facilities against terrorism threats.
Behind the scenes at Westinghouse, doubts flourished. A 2011 confidential assessment noted “a general feeling that the AP1000 projects are at risk.” Nearly three years out, the design wasn’t even finished. Schedule delays and expenses piled up at the Summer site, and the Public Service Commission kept approving alterations. Environmental groups asked the PSC to stop the project at every turn. Then Scana discovered in an audit that Westinghouse and other contractors were wasting millions of dollars in construction materials. Still, the money kept flowing. Santee Cooper coughed up nearly $9 million in bonuses for a job well done on the reactor project—not for its own executives, but for leaders at Scana.
Citizen activists began speaking up, including Lynn Teague, a retired archaeologist turned volunteer lobbyist for the League of Women Voters of South Carolina. She had been scrutinizing the Base Load Review Act with colleagues, including a nuclear engineer who had worked at the Summer plant. After Teague’s group quizzed experts and reviewed available documents, their investigation concluded that SCE&G wasn’t doing enough to oversee the project, possibly because it didn’t have a strong incentive to do so. The way the Base Load Review Act was set up, the more the project cost, the more money the utility made.
At last count, SCE&G had hiked rates for customers nine times in nine years.
In early 2016, Carlette Walker, one of Scana’s top accountants, left a voicemail for Santee Cooper’s nuclear manager saying that all assurances about the project were a sham. She accused executives at her own company of mouthing what people wanted to hear just to get their bonuses. “Whatever they’re telling y’all is just bullshit,” she said, according to the Columbia newspaper The State. “I don’t want you and Santee to get screwed any more by the executives of SCE&G and Scana.”
Around the same time, SCE&G received a commissioned report from the Bechtel Corporation revealing what those close to the Summer project likely already knew: It suffered from a questionable design, bad management, low morale among workers, and no accountability. That damaging bombshell would not be released to regulators or the public for more than a year. Additional documents obtained by the Charleston newspaper The Post and Courier later revealed that Westinghouse had used unlicensed engineers to design parts of the reactors.
In March 2017, Westinghouse filed for bankruptcy. Four months later, the South Carolina utilities announced that the project was dead. More than 5,000 jobs were gone.
The higher utility bills for ratepayers, however, continued. Electric bills averaged $163 a month for SCE&G customers and $118 a month for customers of Santee Cooper, compared with a national average of $112.59. SCE&G customers kept paying 18 percent of their power bills—or $1.2 million every day—for now-abandoned reactors. SCE&G tacked on an average fee of $27 a month, a surcharge that was legal under the Base Load Review Act.
LYNN TEAGUE, FROM THE LEAGUE OF WOMEN VOTERS | PHOTO BY SEAN RAYFORD
SCE&G’s troubles made it a prime candidate for a takeover, and in January, Virginia-based Dominion Energy moved in to buy it. The reason why, environmentalists say, is natural gas. Dominion likely wants to expand its Atlantic Coast Pipeline from Virginia through the Carolinas to Georgia.
Dominion promised ratepayers a one-time cash payment of about $1,000 per household as well as a 5 percent reduction in rates, or about $7 less each month. But it also planned to charge customers several billion dollars—about $4,000 per household over 20 years—to recover costs for the failed project. A portion of that pot would go to stockholders. Given those figures, South Carolina Senate majority leader Shane Massey, a Republican, likened Dominion’s promised $1,000 refund to a payday loan.
Dominion launched an aggressive advertising campaign about its offer, which may have backfired: People who weren’t SCE&G customers called their legislators to support the deal only to learn they weren’t eligible for the $1,000 windfall after all. Then legislators were bombarded by pro-Dominion emails, including from imposters using real constituents’ names. Dominion and SCE&G said they had no idea who was behind the fraudulent emails. Dominion threatened to withdraw the purchase offer if legislators passed any bill to lower rates, even temporarily.
In a court filing, the South Carolina attorney general claimed that the Base Load Review Act was unconstitutional. AARP, with 623,000 members in South Carolina, took out full-page ads urging citizens to tell their legislators to repeal it. Other voices calling for change ranged from Walmart to an alliance of industrial energy users.
For Patrick Cobb, communications director for AARP South Carolina, the problem came down to the lack of transparency from utilities and the absence of a consumer advocate for ratepayers in South Carolina to ask the right questions. “We were hearing from our members and other ratepayers that they’re paying these outrageous utility bills,” he said. “Every year [SCE&G] asked for another rate hike.”
At the same time, the utility was still paying dividends to its shareholders. Scana stockholders enjoyed $87.5 million in dividends each quarter in 2017 alone. At last count, SCE&G had hiked rates for customers nine times in nine years. The rate hikes helped make those dividends possible.
ON A BRIGHT SPRING DAY, wearing glasses and earth tones, Lynn Teague looked more like a friendly librarian than an arm-twister as she strolled past the granite columns in the South Carolina State House lobby. She was there for a press conference on what could happen if Dominion Energy takes over SCE&G, but made time for a discussion about all the reforms needed in South Carolina’s energy system.
The League of Women Voters is neutral on nuclear energy but emphatic about the necessity of good governance, which means getting rid of ill-conceived laws like the Base Load Review Act. The law shifted the burden of proof of mismanagement away from utilities, Teague pointed out; when SCE&G argued for higher rates, it was up to others to prove it didn’t deserve them.
“As we’ve seen over and over again,” Teague said, “they’ve been hiding that information not just from the public but from the regulators.”
Teague knows that 100 percent clean energy or anything close to it will be “a hard slog” in such a red state. But the SCE&G meltdown has created an opening for environmental, civic, and citizen advocacy groups such as the League of Women Voters, Friends of the Earth, and the Sierra Club to encourage the development of solar energy and other renewables—an effort that, according to Teague, also includes South Carolina legislators on both sides of the aisle. Last year, Columbia became the first South Carolina city to commit to 100 percent clean energy, and the mayor has spoken out publicly in support of clean energy and energy-efficiency legislation.
South Carolina now ranks 18th nationally in residential solar installations, according to an industry trade association report. Neighboring North Carolina is second in the nation in solar capacity, producing 4.3 gigawatts in 2017 compared with South Carolina’s 510 megawatts. Given its average of 216 sunny days each year, South Carolina is a natural for more solar, yet its solar energy production lags behind that of some northern states with cooler climates, including New York, New Jersey, and Colorado.
The press conference—co-sponsored by Friends of the Earth and featuring Glen Besa of the Sierra Club—geared up in the state house’s noisy lobby, thronged by reporters and schoolchildren on field trips. Tom Clements, a senior adviser to Friends of the Earth, was the emcee. He’s famous for his “Big Daddy” costume featuring a dollar-sign necklace, which he once sported at a protest outside the building, portraying a politician who had succumbed to the charms of SCE&G. That day, he brandished a giant check written to the utility for “limitless billions.”
Clements is happy to see so many groups talking about the state’s energy future; he wants to keep the pressure on Dominion, a company he indicated can’t be trusted. In Virginia, Dominion accepted a rate freeze from legislators in return for some concessions, but the freeze actually kept rates artificially high. “You cannot take Dominion at face value,” Besa said.
Later that day, the Senate debated a bill to give ratepayers temporary relief from SCE&G’s 18 percent surcharge. Some Republicans were just as vocal as Democrats on the utilities’ outsize influence. Senator Tom Davis, a Republican from coastal Beaufort, argued for moving toward a system without utility monopolies, “to where we have competition, independent power providers, consumers deciding who they want to do business with.” He railed that the General Assembly had missed an opportunity to encourage more energy providers—including solar—who would produce a better product at a lower cost.
Teague’s prediction of “a hard slog” for solar, however, would soon come true. A bill that would have removed a cap—yes, a cap—on solar energy production statewide crashed in the House in April.
SCE&G also convinced the Public Service Commission to impose what Republican representative Nathan Ballentine indignantly called “rock-bottom” prices for solar energy (to stifle competition). Ballentine’s comments were similar to what you might hear from Reverend Woodberry, who has learned not to trust the promises utilities make about job creation.
“They’ll say, ‘Oh, we’re going to bring a coal-fired plant. We’re going to build a nuclear plant. We’re going to build a biomass plant, and bring jobs to the community,'” Woodberry said. “Then people find out the community folks don’t have the skill sets, education, or experience to get the jobs,” and the utilities transfer in their own employees.
Meanwhile, Guild shrugged off the legislative flare-ups over solar. The utilities looked like bullies by pushing to kill new laws advancing solar, he said. He scoffed at SCE&G’s claim that solar subsidies benefit only rich suburbanites.
“As if SCE&G cares about poor people,” he said. “If they did, they’d help people finance energy-efficient retrofits.” South Carolina ranks 42nd out of 50 in policies promoting energy efficiency, according to the American Council for an Energy-Efficient Economy.
Guild takes a long view. He’s lived in South Carolina ever since law school at the University of South Carolina more than 40 years ago. “South Carolina had an inferiority complex as a state,” he said of those days. “We sold ourselves cheap.” The state once received a stunning 75 percent of the nation’s low-level nuclear waste, for instance, but thanks in part to Guild’s work, that’s over.
Now he wants to help legislators and the public see that the entire model of energy production from one large central station is outdated, and that South Carolina can do better again. Energy demand has stayed relatively flat nationally, even with a growing economy and population, because of improvements in energy usage from LED lighting and greater efficiencies in the manufacturing sector. The utilities’ need for continuous growth to increase shareholder profits, he said, is no longer viable.
MORE THAN TWO MONTHS after the Senate debate, the legislature passed a temporary 15 percent rate cut, which eliminated most of the surcharge. SCE&G promptly sued to prevent the rate relief. The temporary rate cut is currently in effect.
South Carolina legislators voted to repeal the Base Load Review Act, the law that created this mess, and brought back a consumer advocate for ratepayers, a position that had been eliminated in 2004. They struck the clause about preserving utilities’ “financial integrity” from the mission of the Office of Regulatory Staff, the agency that’s supposed to represent the public interest on utility matters before the legislature.
The ORS gained the power to subpoena documents from third parties, which will help it advocate for ratepayers before an expected December ruling by state and federal regulators on whether the Dominion deal can go through. (Scana stockholders have already approved the deal.)
What’s more, the ORS recently asked the Public Service Commission to impose financial sanctions against SEC&G that could top $1.5 billion. The sanctions are warranted, ORS attorneys wrote, because, “SCE&G engaged in a deliberate scheme to conceal information” and “continues a blatant pattern of deception and delay.”
In November, the Public Service Commission is expected to hear a complaint, filed by the Sierra Club and Friends of the Earth, asking the PSC to review the Summer project’s cost overruns and get refunds for ratepayers. It will also decide whether to end SCE&G’s 18 percent surcharge permanently. SCE&G executives have protested that the utility might go bankrupt if the surcharge ends, but the PSC is also aware of a state report disclosing that the $444 million haul from the surcharge has gone mostly to pay shareholder dividends.
Meanwhile, state police have opened an investigation into SCE&G; the FBI is looking into the case; the U.S. Securities and Exchange Commission has subpoenaed records related to it; and a federal grand jury is reportedly considering whether SCE&G executives committed fraud during the failed project. In testimony for a civil lawsuit, Carlette Walker, the Scana accountant, said she left her job there because her bosses pressured her to lie about the project’s true costs.
The nuclear meltdown has had the inadvertent effect of bringing together environmental organizations such as the Sierra Club and Friends of the Earth, the South Carolina attorney general, the state Speaker of the House, state electricity cooperatives, trial lawyers representing ratepayers, the U.S. Department of Defense, and allies such as Reverend Woodberry. Groups such as the Palmetto Conservative Solar Coalition, led by the former chairman of the South Carolina Republican Party, are urging politicians to let innovation and the free market prevail.
Woodberry is calling for supporters to join him in the streets for the People’s Climate March in September. He hopes to spark a “big tent” movement, like the one the civil rights crusade launched in the 1960s, this time with supporters of renewable energy, women’s rights, and other causes sustaining one another and combining for greater impact.
He believes that the transformation in our energy system will start in South Carolina and throughout the South, where climate change has already been tied to sea level rise, sunny-day floods, and more-destructive hurricanes, with low-income communities feeling some of the worst effects.
Woodberry knows he needs to give people hope. He believes the South is rising, as it did during the civil rights era—this time for a new-energy future.
This article was funded by the Sierra Club’s Ready for 100 campaign (sc.org/ready-for-100).
This article appeared in the September/October 2018 edition with the headline “Meltdown.”