In a meandering order replete with dense debate on the delicate balance of power between state and federal governments, U.S. district court judge Michelle Childs dismissed (in part, anyway) a complaint filed by crony capitalist energy provider SCE&G (a subsidiary of SCANA) related to the ongoing #NukeGate debacle.
Childs did not completely toss the case, though. Nor did she issue an opinion on its merits. Instead, she simply argued that SCE&G’s initial complaint – filed earlier this month – “fails to plead any allegations” against the specific defendants it named, the individual members of the S.C. Public Service Commission (SCPSC).
Childs’ ruling gives the embattled utility until 3:00 p.m. EDT on Friday, July 27, 2018 to file an amended complaint – which we presume will name members of the S.C. General Assembly (who are ultimately responsible for this high-stakes legal showdown) as defendants.
We presume motions to dismiss that complaint will be unsuccessful, as Childs covered much of the legal basis for upholding a complaint in her ruling.
Three weeks ago, SCE&G filed a lawsuit challenging the constitutionality of a new South Carolina law “significantly reducing company revenues from electric rates authorized by state law and previous orders of the (SCPSC).”
As we exclusively reported last month, legislative leaders reached a deal they claim will undo the damage they did over a decade ago in allowing two utilities (including one owned by the government) to squander more than $10 billion on a pair of now-abandoned reactors in Fairfield County, S.C. Of that sum, $2 billion was collected directly from ratepayers – essentially socializing a significant chunk of the investment risk related to the doomed V.C. Summer nuclear generating plant expansion project.
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(Via: High Flyer)
The socialization of investment risk was accomplished via the now-notorious Base Load Review Act (BLRA) – legislation advanced by liberal state lawmakers and allowed to become law in 2007 by former governor Mark Sanford. Under the terms of this handout, SCANA was allowed to impose an eighteen percent “nuclear surcharge” on ratepayers – a charge they are still paying.
Government-run utility Santee Cooper – which is on the verge of a spectacular collapse – was also allowed to raise rates on consumers in connection with the V.C. Summer project.
Legislators’ compromise – which left $1.6 billion in immediate ratepayer relief on the table – lowered the 18 percent surcharge to a little more than 3 percent, albeit temporarily. A separate offer advanced by Virginia-based Dominion Energy proposes to lower the rate more gradually while providing the aforementioned $1.6 billion in relief (roughly $1,500 for each SCANA ratepayer) as well as another $1.7 billion in debt assumption related to the abandoned nuclear project.
Dominion has made it clear the legislative plan is unacceptable and would likely result in the company rescinding its offer.
In SCE&G’s suit, the utility claims the legislative plan “is unconstitutional and asks the court to issue an injunction prohibiting the SCPSC from implementing the new law.” The suit further alleges that “the rate reduction and other aspects of the new law constitute an unlawful taking of private property, deny (SCE&G) due process of law, and constitute an unlawful bill of attainder, all in violation of various provisions of the United States Constitution.”
Do they have a case? Yes …
In fact, a recent U.S. appeals court ruling in Florida highlighted the firm legal footing on which the utility (deservedly or not) finds itself.
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[/timed-content-server]Nonetheless, Childs threw out the company’s initial complaint – again, in part – on the belief the utility did not properly identify those responsible for the alleged constitutional violations.
“SCE&G has failed to state a plausible claim against the individual (SCPSC) commissioners, and without individual allegations against the individual commissioners, the court cannot infer that any actions by the commissioners violated SCE&G’s constitutional rights under color of state law,” Childs ruled.
She did, however, affirm that the utility “has the right to file its case in federal court” and that attempts to toss the case completely by state legislative leaders – who have intervened to be named as defendants in the action – are unlikely to be successful.
Moreover, the court affirms its authority to hear an amended compliant on the grounds that “an adequate and timely state review is not currently available to SCE&G.”
That means legislative attempts to move the case to the S.C. Supreme Court – which is comprised of justices they appoint – is also unlikely to be successful.
Here is Childs’ ruling …
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