Opinion ID: 1404645
Heading Depth: 1
Heading Rank: 5

Heading: Failure of SCE & G to prove a need for the Facility

Text: Appellant finally contends the Commission erred in finding SCE & G had established the proper need and prudency of building the Facility, given: SCE & G's size relative to other utility companies; the steep economic downturn the country and South Carolina is facing; and the fact that SCE & G will be the first utility to build this type of facility. Because the record demonstrates the Commission adequately considered each of the requirements under the Base Load Review Act, and its determinations are supported by substantial evidence in the record, we disagree. Section 58-33-240(D) of the South Carolina Code (Supp. 2009) provides that in proceedings before the Commission, upon the filing of a combined application, the utility shall have the burden of proving that the decision to build the plant was prudent, and shall have the burden of proof as to all matters on which the commission is required to enter findings under Section 58-33-270(A), (B), (C), (D), and (E). Furthermore, under the new requirements of the Base Load Review Act, the Commission is obligated to go beyond the findings required under the Siting Act to conduct a full pre-construction prudency review of the Facility and the Engineering, Procurement and Construction Contract under which it will be built, including setting out the construction and annual capital cost schedules establishing the prudency and reasonableness of the Facility's costs. S.C.Code Ann. § 58-33-270 (Supp. 2009). Section 58-33-270 requires the Commission to hold a hearing, and thereafter, if the application is approved, issue an order setting out the following findings: (1) that the utility's decision to proceed with construction of the plant is prudent and reasonable considering the information available to the utility at the time; (2) for plants located in this State, that the utility has satisfied the requirements of Section 58-33-160 of the Utility Facility Siting and Environmental Protection Act, either in a past proceeding or in the current proceeding if the current proceeding is a combined proceeding; and (3) for plants located outside South Carolina, that the utility has satisfied the requirements of Section 58-33-160(1)(a), 58-33-160(1)(d), and 58-33-160(1)(f) of the Utility Facility Siting and Environmental Protection Act. (B) The base load review order shall establish: (1) the anticipated construction schedule for the plant including contingencies; (2) the anticipated components of capital costs and the anticipated schedule for incurring them, including specified contingencies; (3) the return on equity established in conformity with Section 58-33-220(16); (4) the choice of the specific type of unit or units and major components of the plant; (5) the qualification and selection of principal contractors and suppliers for construction of the plant; and (6) the inflation indices used by the utility for costs of plant construction, covering major cost components or groups of related cost components. Each utility shall provide its own indices, including: the source of the data for each index, if the source is external to the company, or the methodology for each index which is compiled from internal utility data, the method of computation of inflation from each index, a calculated overall weighted index for capital costs, and a five-year history of each index on an annual basis. (C) If revised rates are requested, the base load review order shall specify initial revised rates reflecting the utility's current investment in the plant which must be determined using the standards set forth in Section 58-33-280(B) and implemented according to Section 58-33-280(D). (D) The base load review order shall establish the rate design and class allocation factors to be used in calculating revised rates related to the plant. In establishing revised rates, all factors, allocations, and rate designs shall be as determined in the utility's last rate order or as otherwise previously established by the commission, except that the additional revenue requirement to be collected through revised rates shall be allocated among customer classes based on the utility's South Carolina firm peak demand data from the prior year. In reviewing the decision of the Commission under a statute for which it is charged with the administration, the Commission is the `expert' designated by the legislature to make policy determinations regarding utility rates; thus, the role of a court reviewing such decisions is very limited. Hamm v. South Carolina Public Service Comm'n, 289 S.C. 22, 25, 344 S.E.2d 600, 601 (1986) (quoting Patton v. South Carolina Public Service Comm'n, 280 S.C. 288, 291, 312 S.E.2d 257, 259 (1984)). [The Court has] traditionally given the [Commission], just as any other agency, respectful consideration in their interpretation of a statute. Where an agency is charged with the execution of a statute, the agency's interpretation should not be overruled without cogent reason. Nucor Steel, a Div. of Nucor Corp. v. South Carolina Public Service Comm'n, 310 S.C. 539, 543, 426 S.E.2d 319, 321 (1992). Without addressing all of the considerations SCE & G advanced to establish its need for the Facility in the Application, the record is replete with evidence from which the Commission could come to the conclusion that SCE & G's need was satisfactorily established. The crux of Appellant's argument is that SCE & G is too small of a utility to be the guinea pig for these types of nuclear facilities, and that given the cost of capital estimates associated with projects of this magnitude, coupled with the downturn in the economy, the costs for this risky facility would ultimately be passed on to the SCE & G customers. While this is a valid and noteworthy point, the Commission addressed each and every concern Appellant presented, over and above the findings it was required to make under section 58-33-270. At the end of the day, the Commission, in a very thorough and reasoned order, determined SCE & G has appropriately established a need for the Facility, and thereafter approved SCE & G's proposed rate increases as reasonable costs to be passed on to the customers for the construction of the Facility. Without a doubt, these determinations are supported by substantial evidence in the record.