Nov 30, 2018
South Carolina Legislative Session Preview
V.C. Summer Abandonment
On July 31, 2017, South Carolina Electric and Gas (SCE&G) and the state’s Public Service Authority (Santee Cooper) announced the abandonment of the construction of two unfinished nuclear reactors at the state’s Virgil C. Summer Nuclear Generating Station in Fairfield County, after spending almost $9 billion on the project. The cost of the project, major construction delays and the bankruptcy announcement of lead contractor Westinghouse earlier in the year compelled the utilities to seek abandonment. More than 5,000 employees were laid off immediately after the announcement. Several lawsuits by ratepayers and employees remain pending in various courts.
The abandonment resulted in extensive study by both the House and Senate in the 2017 legislative offseason. In 2018, the legislature took action to address the issue, which dominated the legislative session. The resulting compromise set out the timeline for the Public Service Commission (PSC) to issue a final order on the pending Base Load Review Act (BLRA) abandonment petition, prospectively repealed the BLRA and temporarily cut ratepayer rates by 15 percent. The bills ordered the PSC to implement the rate cut immediately, and it remains in place until the PSC issues its final order on the matter. The approved legislative package effectively decreased average SCE&G customer bills by $22 a month through the end of the year, and was quickly adopted by the legislature and sent to the governor for consideration.
Gov. Henry McMaster (R) stated numerous times that he planned to veto any bill that did not give entire rate relief to ratepayers, and he promptly vetoed H. 4375, the bill that prospectively repealed the BLRA and implemented temporary rate cuts. However, the House and Senate easily met the two-thirds threshold to override the veto.
The PSC completed several lengthy days of hearings on the matter, but has yet to issue a final order. The legislature also continues to meet regarding the state-owned electric provider that holds a 45 percent stake in the abandoned project. Some leaders, including Gov. McMaster, have called for the legislature to sell Santee Cooper, which requires legislative approval. Gov. McMaster appointed himself to the committee evaluating potential purchase offers.
In 2017, the legislature passed a bill authorizing a plan to address the state's ailing retirement system. Gov. McMaster has continually pushed to offer state employees a deferred-compensation or 401k-style plan, as opposed to the current defined-benefit plan, which promises the state's employees an exact monthly payment based on length of service and salary.
The Joint Committee on Pension Systems Review, which crafted the 2017 funding plan, continued its work on pension reform throughout 2018. However, due to the abandonment of the V.C. Summer nuclear project, legislators were unable to present a concrete plan for future offerings from the state’s retirement system.
The state’s school districts continually face issues that the legislature, in turn, grapples with each year. South Carolina teachers fight for pay increases and student testing reform. Teacher retention has been an ongoing discussion at the State House, with pay often cited as a reason for teachers leaving positions.
Also ongoing is the state’s takeover of low-performing districts in the “corridor of shame.” In 2017, state Superintendent of Education Molly Spearman announced her decision to take control of Allendale County schools, one of the state’s four lowest-performing districts and a plaintiff district in the long-running Abbeville lawsuit for school equity. The Allendale County School District responded by filing a lawsuit aimed at stopping the takeover. Instead of using state funds on a lawsuit, Spearman signed an agreement with the district to allow it to maintain some authority, but the State Department revoked that agreement in 2018. The state-appointed superintendent in Allendale reported that the district had to turn away applicants for teaching positions because so many had applied. The district also reported as a success the innovative collaboration with University of South Carolina-Salkehatchie to offer housing for teachers, with more than 30 teachers applying for 16 spaces in dorms for $500 per month, including utilities.
Other school districts taken over by the state also report small victories. Florence District 4 signed agreements with other school districts to share professional and maintenance services. The agreements will save Florence 4 about $600,000 each school year. Spearman plans to expand these types of agreements across the state, as the State House does not prefer to force school district mergers, and legislators gave her broader authority this past session to require districts to consolidate service agreements to save money.
Despite legislative support, and support from Spearman, the state’s voters rejected November’s ballot referendum to make the superintendent role an appointed cabinet position.