Wednesday, January 3, 2018 Blog · News

Fool me once… Dominion has a great deal for you (us)! Failure to transact? Groundhog Day on offshore drilling, but a vigorous defense of the ocean ensues. The 526 mystery. Great news for elephants!

by Dana Beach

Folks,

As the sun streams through the ice gaps on Tradd Street and, to paraphrase Charleston Airport head Paul Campbell, “Mother Nature takes care of the snow,” (at a truly “glacial” pace), the Post and Courier continues to shine the light on South Carolina’s primordial regulatory system.  (Thawing of both may begin in the near future, we hope.)

The latest case in point is this article by Andrew Brown, revealing that most members of the South Carolina Public Service Commission (PSC) – the agency charged with protecting consumers from excessive utility rate increases (from SCANA, for example) – are, essentially, secretly on the take.

Post and Courier: Golf, beaches and power: How utilities wine and dine the public officials that set your rates

From the article:

Utilities and industry special interest groups over the past five years picked up the tab for nearly $140,000 in conference expenses, meals and other perks for South Carolina’s public service commissioners — the people who decide what you pay for water, electricity and natural gas, a Post and Courier investigation found.

Travel and other records obtained by the newspaper reveal how these commissioners frequently eat, drink and play golf with the people they regulate. They also show how on trip after trip commissioners failed to properly report these as gifts as required under state ethics laws.

One unfortunate consequence of these intimate regulator/regulatee liaisons may be the PSC’s decade-long abrogation of oversight of SCANA, while the utility front-loaded rate increases for the state’s largest financial debacle in history, the abandoned nuclear plant.

And that’s only the tip of the iceberg.  Another unwanted offspring has been decades of abysmal performance, (literally among the worst in the nation), during which SCANA wildly under-invested in renewable energy like solar power and ignored energy efficiency – despite the fact that these investments represent the cleanest and cheapest energy available.  All of this happened with full review and approval by the PSC.

In fairness, the PSC’s hands were partially tied by S.C. legislators who, a decade ago, bequeathed to South Carolina ratepayers the humorously entitled “South Carolina Ratepayer Protection Act,” (a.k.a. the “Base Load Review Act”).  (It is also worth noting that the PSC commissioners are themselves appointed by these same legislators.)

This law, as virtually everyone now knows, enabled the front-loading of massive rate increases for electric power that will never be delivered.  The law has been universally repudiated, most notably by almost every representative and senator who voted for it in 2007.

So, the first order of business in this upcoming legislative session will be to revoke the Base Load Review Act (BLRA), right?  Well … maybe not.  Because the latest deal South Carolina ratepayers can refuse is from Virginia-based Dominion Power.  Dominion would like to buy ailing SCANA, (whose market value has fallen by half over the past year), and thus create one of the nation’s most gargantuan power monopolies.

And here’s the catch:  The head of Dominion says the deal hangs on South Carolina keeping the BLRA.  In Dominion CEO Thomas Farrell’s vaguely ominous words, “If it’s insufficient to South Carolina, then we won’t transact.”  Hmm…  (Unlike my wife, Mr. Farrell was definitely not a UVA English major.)

To paraphrase the immortal words of Pete Townshend, will we be fooled again?  As this next article, by Tony Bartelme, reports, we won’t!  (If we pay attention…)

Post and Courier: Dominion Energy: South Carolina’s white knight or a deceptive corporate raider?

According to the article, Dominion used the same legislative sleights of hand in Virginia to obtain large rate increases for power that never materialized.  From the article:

The company also has its share of critics. “It is a 100 percent certainty that this merger will take money out of the South Carolina economy and hurt South Carolina businesses and ratepayers,” said Jeff Thomas, author of Virginia Politics & Government in a New Century.

In his book, Thomas describes how Dominion doled out tens of thousands of campaign donations to lawmakers, and how many lawmakers have significant holdings of Dominion stock. One lawmaker had more than $250,000 worth of Dominion shares, he wrote.

“There’s no such thing as representative government in Virginia energy policy anymore,” he told The Post and Courier. “Dominion just buys politicians and writes it themselves, to the detriment of every person, business, and school that flips on a light switch.”

This sounds eerily familiar, but here is the good news, so far: Although Governor McMaster appears to support the merger, this next article, by Avery Wilks with the State, reports that key legislators remain unimpressed.

The State: Some SC lawmakers want to stop SCE&G’s nuclear bills, risking Dominion deal

From the article:

“I’m probably less favorable now than I was before, and I wasn’t real favorable before,” said Senate Majority Leader Shane Massey, R-Edgefield. “I still have a problem requiring customers to continue paying for V.C. Summer. Customers ought to be getting a better deal than that.”

“The bottom line is that just because there’s a new name on the (power) bill, it shouldn’t change anything for us (legislators),” said state Rep. Russell Ott, D-Calhoun, vice chair of the House committee that investigated the nuclear project last fall.

Good for Senator Massey and Representative Ott!

The bottom line, in my view is, as follows:

  1. The Base Load Review Act (BLRA) must be repealed the day the session begins.  This is not a negotiable point.  The Dominion deal, with BLRA in place, ensures that ratepayers will continue to pay for the dead nuclear plant for decades to come.
  2. Farrell is, at least, not telling the whole story.  Although this particular offer, at this particular price, will go away if the guaranteed rate increases disappear, Dominion can, and probably will, simply substitute a lower offer, reflecting the lower projected stream of revenue.  For Dominion, it all comes down to return on investment.
  3. While SCANA stockholders would be worse off without the BLRA, ratepayers would be exactly that much better off.  That is, the Base Load Review Act is an instrument to transfer wealth from SCANA customers to SCANA shareholders.
  4. Creating a “Consumer Advocate” and putting new people on the Public Service Commission and a new name on power bills will do nothing to prevent this type of abuse from happening in the future as long as the system can be manipulated by politicians whose campaigns are funded by utility lobbyists.
  5. The energy sector must be restructured to allow competition in the power production sector.  This means separating power production from distribution, which will remain a regulated monopoly.

For more on the changes needed to reform the power sector in South Carolina, here is an op-ed by Conservation League Energy and Climate Program Director Eddy Moore in Statehouse Report.

Statehouse Report: Moore editorial: The root of S.C.’s $9 billion nuclear plant problem

From the article:

House and Senate investigative committees diligently exposed feckless utility management and the folly of the Base Load Review Act, which insulated utility companies from financial risk and left ratepayers “holding the bag” for the project.

But these investigations still did not fully expose the root of the failure, which goes beyond the Base Load Review Act, the absence of an official public utility consumer advocate in South Carolina, or the makeup of the Public Service Commission.

These deficiencies stem, directly or indirectly, from a system of regulation that assigns profit to utilities based on the size of capital investments, rather than on most efficiently meeting the state’s energy needs.

Eddy’s three points of reform are essential reading for anyone interested in South Carolina’s energy future.

More on energy, but this time from the ocean …

The bad news is that President Trump has opened most of the nation’s coastal waters, including the Southeast, to oil exploration and drilling.

The good news is that this decision is being vigorously opposed by almost all South Carolina officials – Democrats, Republicans and independents – at the local, state and federal levels.

Senator Tom Davis, from Beaufort, has been particularly outspoken, as this op-ed in the Island Packet illustrates.

Island Packet: Davis editorial: Offshore testing for oil is bad public policy

Says Senator Davis:

The Trump administration recently announced a new drilling plan that includes opening up areas off South Carolina’s coast to seismic testing for oil. This is terrible public policy.

Senator Davis lists the harm seismic testing causes to marine life, the proprietary nature of the test results, the adverse impacts to the coast from spills and oil production infrastructure, and the current position of the U.S. as an oil exporter as reasons to oppose the program.

In this next piece, Beaufort Mayor Billy Keyserling, a consistent opponent of offshore oil production, vows to fight the Administration on the proposal.

Island Packet: Here’s how Trump’s latest move could have a big impact on Beaufort County waters

Says Mayor Keyserling:

“We’re diligently watching and we’re vehemently opposed,” Keyserling said. “It’s not a matter of national security; it’s not a matter of energy needs; it’s a matter of risks and looking for oil that we don’t believe is there.”

On the cold north coast (of South Carolina), the Sun News reports that political leaders in Myrtle Beach are also speaking out against drilling.

Sun News: Trump’s offshore drilling plan defies ‘wishes of every coastal state, city and county’

From the article:

  • Horry County Council chairman Mark Lazarus: “I’m disappointed that the administration is going against the wishes of every coastal state, city and county.”
  • Newly elected Myrtle Beach Mayor Brenda Bethune: “I’m against off-shore drilling and seismic testing just because of the impact that it can have on our sea life as well as on our tourism if there were to be a major catastrophe.”
  • And from Eddy Moore: “South Carolinians have successfully fought prior government efforts to give away our shores to the oil industry, and we will do it again.”

According to this article from the State, Congressman Jim Clyburn has consistently opposed offshore drilling and vows to support congressional action to stop it.

The State: This SC politician ‘staunchly opposes offshore drilling,’ plan proposed by Trump

From the article:

“Tourism is our state’s No. 1 industry, and we cannot afford to risk destroying our beaches and coastal environments,” Clyburn tweeted. “If the President will not change course, Congress should act swiftly to block this dangerous expansion of offshore drilling.”

It would be great if we had 100 percent support on this, and for all practical purposes, we do.  But then there is S.C. Rep. Jeff Duncan, one of the oil industry’s leading advocates in Congress.

According to Associated Press reporter Meg Kinnard, Rep. Duncan says the proposal is “tremendous news for American energy independence [News flash: the U.S. became a net oil exporter in 2011], economic development, and job creation [except for our number one economic sector, tourism].”

Twitter: Associated Press: Meg Kinnard

More importantly, Governor Henry McMaster has yet to weigh in on the proposal.  This is the single most important message we can send the Administration, both legally and because of Governor McMaster’s close relationship with the president, as this article by Bo Petersen with the Post and Courier reports.

Post and Courier: South Carolina Gov. Henry McMaster could decide offshore oil and gas drilling

From the article:

Alan Hancock of the Charleston-based Coastal Conservation League made no bones about the importance of McMaster’s voice in the argument. 

“South Carolinians should absolutely comment on the Trump Administration, but the key voice on this is Gov. Henry McMaster,” Hancock said. “He needs to step into the arena and make a strong public statement in support of South Carolina’s coast.”

Almost finally, wisdom from the Irish!  (… the Irish American Studies Department at the College of Charleston.)  Professor Joe Kelly explains the inconsistency of including the I-526 extension in the plan to revitalize West Ashley.

Post and Courier: Kelly editorial: Unwarranted I-526 focus threatens West Ashley plan

After a delightful evocation of time spent in a walkable, bikeable, human-scale town in Spain, Professor Kelly points out the following:

It is very odd, then, that the executive summary of the commission’s report, Plan West Ashley, supports ‘526 completion’ and claims that ‘this support is incorporated into each section.’ The ‘Overview’ of the plan’s transportation section lists ‘complete I-526’ as the second of six most important ‘community concerns.’

Someone who reads the whole plan instead of these summaries gets a very different impression. Only 10 of 67 working groups even mentioned the I-526 extension; one group said don’t do it and several groups were equivocal, some even putting question marks next to the term.

At best, I-526 is an afterthought to people in West Ashley. We are far more concerned with bike and pedestrian connectivity. We’re much more interested in public transportation. For every focus group that mentioned the I-526 extension, three-and-a-half tables pleaded for better transit services.

There’s no blarney in this, Professor Kelly!

Finally, finally, great news for elephants!  National Geographic reports that, as scheduled, China has closed the trade in ivory.

National Geographic: China shuts down its legal ivory trade

From the article:

As of December 31, China’s legal, government-sanctioned ivory trade will come to a close.  All of the country’s licensed ivory carving factories and retailers will be shuttered in accordance with a landmark 2015 announcement from Chinese President Xi Jinping and then U.S. President Barack Obama.

China and the U.S. both agreed to “near-complete” ivory bans, which prohibit the buying and selling of all but a limited number of antiques and a few other items. The U.S.’s ivory ban went into effect in June 2016. China’s goes into effect December 31, 2017.

This is the single most important step possible to stop the slaughter of these beautiful, wise animals.  Good for China and good for the U.S.

Have a great week, and good luck thawing out!

Dana


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