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South Carolina Energy Users Committee v. South Carolina Electric & Gas

Supreme Court of South Carolina

October 22, 2014

South Carolina Energy Users Committee, Appellant/Respondent,
v.
South Carolina Electric and Gas, South Carolina Office of Regulatory Staff and Pamela Greenlaw, Respondents, and Sierra Club, is Respondent/Appellant. Appellate Case No. 2013-000529

Heard: April 16, 2014.

Appeal From The Public Service Commission. Appellate Case No. 2013-000529.

Scott Elliott, of Elliott & Elliott, P.A., of Columbia, for Appellant/Respondent.

Robert Guild, of Columbia, for Respondent/Appellant.

Belton Townsend Zeigler, of Pope Zeigler, LLC, and James B. Richardson, Jr., both of Columbia, K. Chad Burgess and Matthew W. Gissendanner, of Cayce, Florence P. Belser, Nanette S. Edwards, Jeffrey M. Nelson, and Shannon Bowyer Hudson, all of Columbia, for Respondents.

CHIEF JUSTICE TOAL. PLEICONES, BEATTY, KITTREDGE and HEARN, JJ., concur.

OPINION

Page 914

[410 S.C. 351] TOAL:, CHIEF JUSTICE.

The South Carolina Energy Users Committee (the SCEUC) and the Sierra Club (collectively, Appellants) appeal orders of the Public Service Commission (the Commission) approving Respondent South Carolina Electric & Gas's (SCE& G) application for updated capital cost and construction schedules, pursuant to the Base Load Review Act, S.C. Ann. § § 58-33-210 to -298 (Supp. 2013) (the BLRA).[1] In essence, this appeal presents the questions of whether the Commission applied the correct section of the BLRA, and whether the Commission must also consider the prudence of project completion at the update stage. We affirm.

Facts/Procedural Background

On March 2, 2009, SCE& G obtained an initial base load review order[2] authorizing it to complete a project involving the construction of two 1,117 net megawatt nuclear units in connection with the construction of a nuclear power plant at the V.C. Summer Nuclear Station located near Jenkinsville, South Carolina.

On May 15, 2012, SCE& G petitioned the Commission for a base load review order approving updates to the capital cost and construction schedules for the project. SCE& G sought approximately $283 million in capital costs to be recouped from its customers in rates pursuant to the BLRA. The application comprised the following changes to the costs enumerated in the initial base load review order: (1) an Engineering, Procurement, and Construction Contract (EPC) change [410 S.C. 352] order resulting from a settlement agreement for schedule changes and additional costs related to the time frame in which the Combined Operating License was received from the Nuclear Regulatory Commission, the redesign and construction of certain components, and certain Unit 2 site conditions ($137.5 million); (2) owner's costs ($131.6 million); (3) transmission costs ($7.9 million); and (4) additional EPC change orders for cyber security ($5.9 million), healthcare costs ($139,573), and wastewater piping ($8,250). With respect to updates to the

Page 915

construction schedules, SCE& G sought to delay the completion date of Unit 2 by eleven months, which would advance the date for completion of the entire project by seven and one-half months.

The Commission received timely notices to intervene by the Sierra Club,[3] the SCEUC, an organization consisting of industrial customers of SCE& G, and Pamela Greenlaw, a residential customer.[4]

A hearing was convened before the Commission to assess the application on October 2-3, 2012. By order dated November 15, 2012, the Commission approved $278.05 million of the $283 million in cost increases to the previously approved capital cost budget and approved the updated construction schedule, finding the cost increases resulted from " the normal evolution and refinement of construction plans and budgets for the Units and not the result of imprudence on the part of SCE& G."

Appellants filed petitions for reconsideration. In their petitions, along with specific errors, Appellants averred that the Commission erred generally in permitting the modifications after SCE& G did not anticipate the cost adjustments when it originally filed for an initial base load review order; that SCE& G was required to present a full evaluation of the prudence of the decision to continue to construct the nuclear units; and [410 S.C. 353] that the evidence in the Record was insufficient to meet that burden. By order dated February 14, 2013, the Commission denied Appellants' petitions for rehearing, finding they lacked merit. This appeal of the Commission's base load review order and decision to deny the petitions for reconsideration followed.

Issues

I. Whether the Commission erred by applying the wrong section, and therefore the wrong standard, of the BLRA?
II. Whether the Commission erred in holding that a prudency evaluation of the need for the continued construction of the units is not required under the BLRA?
III. Whether the evidence supports the Commission's finding that the additional capital costs were prudent under the BLRA?

Standard Of Review

" This Court employs a deferential standard of review when reviewing a decision from the Commission and will affirm the Commission's decision if it is supported by substantial evidence." S.C. Energy Users Comm. v. Pub. Serv. Comm'n of S.C., 388 S.C. 486, 490, 697 S.E.2d 587, 589-90 (2010) (citing Duke Power Co. v. Pub. Serv. Comm'n of S.C., 343 S.C. 554, 558, 541 S.E.2d 250, 252 (2001)). " The Commission is considered the expert designated by the legislature to make policy determinations regarding utility rates." Id. at 490, 697 S.E.2d at 590 (citing Kiawah Prop. Owners Grp. v. Pub. Serv. Comm'n of S.C., 359 S.C. 105, 109, 597 S.E.2d 145, 147 (2004)); see also Hamm v. Pub. Serv. Comm'n of S.C., 289 S.C. 22, 25, 344 S.E.2d 600, 601 (1986) (stating that because the Commission is an " expert" in utility rates, " the role of a court reviewing such decisions is very limited" (quoting Patton v. Pub. Serv. Comm'n of S.C., 280 S.C. 288, 291, 312 S.E.2d 257, 259 (1984))). " The construction of a statute by the agency charged with its administration will be accorded the most respectful consideration and will not be overruled absent compelling reasons." Dunton v. S.C. Bd. of Exam'rs in Optometry, 291 S.C. 221, 223, 353 S.E.2d 132, 133 (1987); see also Nucor Steel v. Pub. Serv. Comm'n of S.C., 310 S.C. 539, 543, [410 S.C. 354] 426 S.E.2d 319, 321 (1992) (" Where an agency is charged with the execution of a statute, the agency's interpretation should not be overruled without cogent reason." ). Thus,

[b]ecause the Commission's findings are presumptively correct, the party challenging the Commission's order bears the burden of ...

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