1 Indicates Matter Stricken

2 Indicates New Matter

3
4 COMMITTEE REPORT
5 January 10, 2018
6
7 H. 4375
8
9 Introduced by Reps. McCoy, Ott, Lucas, Anderson, Ballentine,
10 Blackwell, Caskey, Crawford, Crosby, Davis, Finlay, Forrester,
11 Gilliard, Hardee, Henegan, Hixon, Mack, Pope, Rutherford,
12 J.E. Smith, Sandifer, Stavrinakis, Erickson, Huggins, W. Newton,
13 Bales, Young, McEachern, Clary, Tallon, Brown, Fry,
14 Robinson-Simpson, V.S. Moss, Clyburn, Martin, Magnuson,
15 Bennett and Arrington
16
17 S. Printed 1/10/18--H.
18 Read the first time January 9, 2018.
19             
20
21 THE COMMITTEE ON JUDICIARY
22 To whom was referred a Bill (H. 4375) to amend the Code of
23 Laws of South Carolina, 1976, by adding Chapter 34 to Title 58 so
24 as to establish provisions for specific utility plants or projects in
25 regard, etc., respectfully
26 REPORT:
27 That they have duly and carefully considered the same and
28 recommend that the same do pass with amendment:
29
30 Amend the bill, as and if amended, page 32, beginning on line
31 38, by deleting SECTION 5 in its entirety.
32 Renumber sections to conform.
33 Amend title to conform.
34
35 F. GREGORY DELLENEY for Committee.
36             

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9 A BILL
10
11 TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA,
12 1976, BY ADDING CHAPTER 34 TO TITLE 58 SO AS TO
13 ESTABLISH PROVISIONS FOR SPECIFIC UTILITY PLANTS
14 OR PROJECTS IN REGARD TO RATE DETERMINATIONS
15 AND OTHER REQUIREMENTS WHICH WILL SUPPLEMENT
16 THE GENERAL RATE PROVISIONS AND REQUIREMENTS
17 OF ARTICLE 7, CHAPTER 27, TITLE 58; TO AMEND
18 ARTICLES 4 AND 5, CHAPTER 33, TITLE 58, RELATING TO
19 THE BASE LOAD REVIEW ACT OF 2007, SO AS TO
20 FURTHER PROVIDE FOR PROCEDURAL AND OTHER
21 MATTERS RELATING TO THE ACT, INCLUDING
22 PROVISIONS TO DEFINE CERTAIN TERMS, AND TO
23 PROVIDE THAT RATE INCREASES FOR THESE BASE
24 LOAD PLANTS PROSPECTIVELY SHALL BE DETERMINED
25 IN ACCORDANCE WITH ARTICLE 7, CHAPTER 27, TITLE
26 58, AS WELL AS CERTAIN REVISED PROVISIONS OF THIS
27 ARTICLE; TO AMEND SECTION 58-27-850 RELATING TO
28 CHANGES OF RATES BY THE PUBLIC SERVICE
29 COMMISSION AFTER INVESTIGATION, SO AS TO
30 PROVIDE THAT THE PROVISIONS OF THIS SECTION AND
31 THE ARTICLE WHEREIN IT IS CONTAINED SHALL BE
32 SUPPLEMENTED BY THE PROVISIONS OF CHAPTER 34;
33 AND TO DELETE ARTICLES 1, 3, AND 7 OF CHAPTER 33,
34 TITLE 58, RELATING TO UTILITY FACILITY SITING,
35 PROTECTIONS, AND CERTIFICATION.
36
37 Be it enacted by the General Assembly of the State of South
38 Carolina:
39
40 SECTION 1. (A) The General Assembly finds that:
41 (1) It is necessary to exercise its constitutional authority
42 pursuant to Section 1, Article IX of the South Carolina

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 1 Constitution, 1895, to regulate electric utility rates to protect the
2 public interest and ratepayers of South Carolina.
3 (2) The nuclear construction of V.C. Summer Nuclear Units 2
4 and 3 near Jenkinsville, South Carolina has been plagued with
5 serious problems from the outset, including billions of dollars of
6 cost overruns, years of delays, flawed construction plans, faulty
7 designs, inadequate management of contractors, mismanagement,
8 lack of oversight, imprudent actions and decisions, and a lack of
9 transparency and truthfulness with regulators and investors that has
10 caused serious harm to the public interest and ratepayers of South
11 Carolina.
12 (3) The Base Load Review Act was abused, material
13 information was withheld from regulators, and regulators were
14 intentionally misled, all of which contributed to the Public Service
15 Commission approving rate increases that otherwise would not
16 have been approved and which were inconsistent with the intent of
17 the General Assembly and the law of South Carolina.
18 (4) The Base Load Review Act has been interpreted and
19 applied in a manner inconsistent with the intent of the General
20 Assembly and it is necessary to provide clarification as to the
21 intent of the General Assembly, including defining undefined
22 terms and resolving inconsistencies within the Base Load Review
23 Act in order to protect the public interest.
24 (5) A utility must be subject to a heightened duty of utmost
25 care and diligence to its customers in the decision-making
26 processes and actions taken by the utility and any affiliated person
27 or entity relating to ratemaking, construction, construction
28 activities, expansion and operation of base load nuclear plants.
29 (6) It is necessary to apply the “used and useful test” which has
30 long served as the foundation of utility law in South Carolina.
31 (7) It must recognize the constitutional mandate that any
32 legislation must achieve the proper balance between protecting the
33 interest of the utility’s shareholders and the interest of the
34 customers, along with further constitutional limitations prohibiting
35 certain retroactive applications of legislation; accordingly, the
36 General Assembly finds it necessary to exercise its constitutional
37 authority to regulate rates through enacting a new ratemaking
38 statute applying the “used and useful test” to be applied to projects
39 initiated pursuant to the Base Load Review Act while also
40 amending the Base Load Review Act to provide clarifications
41 should a court of competent jurisdiction find that the Constitution
42 of this State prohibits application of the “used and useful test” to
43 projects initiated pursuant to the Base Load Review Act.

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 1 (B) The General Assembly therefore declares its intent to enact
2 legislation that will permit the Public Service Commission through
3 the exercise of its authority as contained in this act to:
4 (1) remove all rate increases associated with the construction
5 of the V.C. Summer nuclear project near Jenkinsville that had been
6 previously imposed;
7 (2) prevent ratepayers from paying for any additional costs
8 of the failed and abandoned project; and
9 (3) implement interim electric rates which would remove all
10 costs associated with this project from ratepayer bills and would be
11 effective until pending proceedings before the commission are
12 resolved.
13
14 SECTION 2. Title 58 of the 1976 Code is amended by adding:
15
16 “CHAPTER 34
17
18 Rate Determinations and Requirements for Certain
19 Utility Plants
20
21 Section 58-34-100. (A) On and after the effective date of this
22 chapter, the determination of electric rates and charges for plants
23 or projects as defined in subsection (B) must be as provided by the
24 provisions of this chapter as supplemented by the provisions of
25 Article 7, Chapter 27, Title 58, and not as provided in Chapter 33.
26 In addition, a resumption of a base load project governed by the
27 former provisions of Chapter 33, which has been abandoned, also
28 shall be governed by the provisions of this chapter in regard to
29 these plants, as well as the revised provisions of Chapter 33.
30 (B) The following terms and the explanatory provisions
31 relating to them, for purposes of this chapter, unless the content
32 clearly indicates otherwise, have the definitions or applications
33 below:
34 (1) ‘Imprudent’ or ‘imprudence’ means and includes, but is
35 not limited to, the lack of caution, care, and diligence. Imprudent
36 or imprudence includes, but does not require, a finding of
37 negligence or recklessness. Imprudence on behalf of any
38 contractor, subcontractor, agent, or person hired to construct a
39 plant shall be attributed to the utility.
40 Imprudence includes, but is not limited to, any one or more of
41 the following:
42 (a) failure to timely disclose and provide to the
43 commission or the Office of Regulatory Staff any report, study,

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 1 analysis, or written communication material to a particular project
2 prepared by a third party it engaged or caused to be engaged and
3 furnished to the utility which brings into question the management,
4 supervision, or oversight of the project, the budgeted costs of the
5 project, the performance of contractors or subcontractors on the
6 project, or the scheduled completion date of the project;
7 (b) imbalance of the original cost estimates of the project
8 as made by the utility as compared with the final cost estimates or
9 anticipated cost estimates of the project. Where the actual costs of
10 the project to date or the anticipated costs of the project at its
11 completion exceeds one hundred twenty percent or more of the
12 utility’s original cost estimates of the project, it may be presumed
13 that imprudence on the part of the utility is present;
14 (c) inappropriate or poor management or oversight
15 decisions in the construction or operation of the project including
16 failure to keep knowledgeable utility management or supervisory
17 personnel on the project site to ensure proper supervision and
18 oversight of the project and its construction;
19 (d) failure of the utility to act in the general public interest
20 in management and oversight decisions in the acquisition,
21 construction, or operation of the project as determined by the
22 commission;
23 (e) the acceptance of risks in the construction of the
24 project which are inappropriate to the general public interest of the
25 State of South Carolina as determined by the commission; and
26 (f) any other fact, factor, or relationship which indicates
27 the lack of prudence as defined in this section as determined by the
28 commission.
29 Imprudent or imprudence as used in this chapter includes the
30 presence of one or more of the factors enumerated in this item
31 which have occurred since the base load review order or project
32 development order and its attendant finding of prudency.
33 The utility shall bear the burden of proving the prudency of each
34 individual action or decision challenged. If the utility fails to
35 prove prudency as it relates to any individual action or decision, all
36 costs incurred relating to the project are deemed imprudent. The
37 Office of Regulatory Staff may challenge as imprudent any action
38 or decision relating to the project or in the context of the entire
39 project.
40 (2) ‘Plant’ or ‘project’ means a plant constructed pursuant to
41 a base load review order or project development order as provided
42 for in the Base Load Review Act.

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 1 (3) ‘Prudent’ or ‘prudence’ means and requires a high
2 standard of care in making decisions and taking actions in order to
3 protect the public interest.
4 In the context of this chapter, it means a high standard of
5 caution, care, and diligence in regard to any action or decision
6 taken by the utility or one acting on its behalf including, but not
7 limited to, its officers, board, agents, employees, contractors,
8 subcontractors, consultants, or any other person acting on behalf of
9 or for the utility affecting the project.
10 A finding of prudency may be revisited where new information
11 comes available to the commission relating to the prudency finding
12 that was unavailable to the commission at the time the decision
13 was made. Prudency is required in the context of the project as a
14 whole and also as it relates to each individual action or decision
15 affecting the project.
16 To the extent a utility enters a contract with a third party that
17 delegates some or all decision-making authority related to the
18 project, the utility retains the burden of establishing the prudency
19 of specific items of cost or specific third party decisions.
20 (4) ‘Utility’ means a person owning or operating equipment
21 or facilities for generating, transmitting, or delivering electricity to
22 South Carolina retail customers for compensation, but it shall not
23 include electric cooperatives, municipalities, the South Carolina
24 Public Service Authority, or a person furnishing electricity only to
25 himself, itself, its residents, employees, or tenants when the
26 electricity is not resold or used by others.
27 (C) Other definitions contained in Section 58-27-10 also apply
28 to the provisions of this chapter mutatis mutandis.
29
30 Section 58-34-110. No costs associated with the construction or
31 expansion of a facility, including preconstruction costs, capital
32 costs, construction work in progress costs, return on equity,
33 weighted average cost of capital, or AFUDC undertaken by a
34 utility pursuant to an existing base load review order under Article
35 4, Chapter 33, Title 58, may be made a part of the rate base or
36 otherwise included in the rates charged by the electric utility or
37 recovered from customers in any form until such time as the
38 facility is determined by the commission to be used and useful in
39 service to the public. Except as stated in this section, no electric
40 utility property is considered used and useful until it commences
41 commercial operations and is presently providing actual electric
42 utility service to customers. If any previous orders of the
43 commission have approved any of these costs to be part of the rate

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 1 base or otherwise included in the rates charged by the utility, the
2 Office of Regulatory Staff shall petition the commission to have
3 these costs removed permanently, and if so, the provisions of
4 Section 58-34-120 regarding interim rates shall apply pending the
5 final determination, including appeals of the petition filed by the
6 Office of Regulatory Staff.
7
8 Section 58-34-120. Notwithstanding the provisions of Section
9 58-34-110, upon abandonment of construction of a plant, the
10 commission may upon its own motion, or upon petition from any
11 party, or by a filing of a public utility, authorize the collection of
12 interim rates until a plant or project the utility is constructing in
13 this State is used and useful in service to the public and is then
14 providing actual utility service to customers, or until proceedings
15 relating to the abandonment of the plant or project are concluded.
16 The interim rates as imposed by this section, after notice and
17 hearing, must not include any preconstruction costs, capital costs,
18 construction work in progress costs, return on equity costs,
19 weighted average cost of capital, or AFUDC. The interim rates
20 shall remain in effect, notwithstanding any litigation or repeals
21 pertaining to them, until the final conclusion including appeals of
22 proceedings involving the abandonment of the plant.
23
24 Section 58-34-130. The commission shall have the power to
25 evaluate the efficiency or prudence of acquisition, construction, or
26 operating practices of a utility subject to the provisions of this
27 chapter. In the event the commission determines that a portion of
28 the costs of acquisition, construction, or operation were incurred
29 due in whole or in part to a lack of efficiency or prudence, it shall
30 have the power and authority to exclude all or a portion of those
31 costs from the revenue requested by the utility.
32
33 Section 58-34-140. The Executive Director of the Office of
34 Regulatory Staff is authorized to employ expert witnesses and
35 other professional engineering, construction, or other experts or
36 consultants as the executive director considers necessary to assist
37 the regulatory staff in its participation in proceedings under this
38 chapter. The compensation paid to these persons may not exceed
39 the compensation ordinarily paid by the regulated industry for
40 these specialists. Upon agreement between the utility and the
41 Office of Regulatory Staff or upon approval of the review
42 committee established under Section 58-3-20, the compensation
43 and expenses must be paid by the utility involved.

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 1
2 Section 58-34-150. This chapter applies to all cases,
3 proceedings, petitions, or matters pending on or after the effective
4 date of this chapter, including petitions filed pursuant to Article 4,
5 Chapter 33, Title 58.”
6
7 SECTION 3. Articles 4 and 5, Chapter 33, Tile 58 of the 1976
8 Code are amended to read:
9
10 “Article 4
11
12 Base Load Review Act
13
14 Section 58-33-210. This article is known, and may be cited, as
15 the ‘Base Load Review Act’ and is applicable to utilities as
16 defined in Section 58-33-220 of this article.
17
18 Section 58-33-220. The following terms and the explanatory
19 provisions relating to them, when used in this article, have the
20 following meanings or applications, unless another meaning or
21 application is clearly apparent from the context:
22 (1) ‘Allowance for Funds Used During Construction’ or
23 ‘AFUDC’ means the allowance for funds used during construction
24 of a plant calculated according to regulatory accounting principles.
25 ‘AFUDC’ shall not include any costs from a plant which fails to
26 commence commercial operation, is abandoned, or is not in
27 compliance with previously approved construction schedules or
28 previously approved cost estimates. AFUDC also shall not include
29 any costs from a plant where the utility fails to prove the prudency
30 of a challenged action or decision or the commission finds the
31 utility withheld material information related to the plant’s
32 construction schedules or costs.
33 (2) ‘Base load plant’, or ‘plant’, or ‘project’ means a new coal
34 or nuclear fueled electrical generating unit or units or facility that
35 is designed to be operated at a capacity factor exceeding seventy
36 percent annually, has a gross initial generation capacity of three
37 hundred fifty megawatts or more, and is intended in whole or in
38 part to serve retail customers of a utility in South Carolina, and for
39 a coal plant, includes Best Available Control Technology, as
40 defined by the United States Environmental Protection Agency, for
41 the control of air emissions.

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 1 (3) ‘Base load review application’ or ‘application’ means an
2 application for a base load review order under the terms of this
3 article.
4 (4)(3) ‘Base load review order’ means an order issued by the
5 commission pursuant to Section 58-33-270 establishing that if a
6 plant is constructed in accordance with an approved construction
7 schedule, approved capital costs cost estimates, and approved
8 projections of in-service expenses, as defined herein, and is
9 presently generating, transmitting, or delivering electricity to retail
10 customers, the plant is considered to be used and useful for utility
11 purposes such that its capital costs are prudent utility costs and are
12 properly included in rates. If a plant fails to commence
13 commercial operations or is abandoned, the plant must be
14 considered not to be used and useful for utility purposes such that
15 all costs are properly excluded from rates. If construction of a
16 plant is not in accordance with previously approved construction
17 schedules or previously approved capital cost estimates, the plant
18 must be considered not to be used and useful for utility purposes
19 such that its capital costs are properly excluded from rates.
20 (5)(4) ‘Capital costs’ or ‘plant capital costs’ means costs
21 associated with the design, siting, selection, acquisition, licensing,
22 construction, testing, and placing into service of a base load plant,
23 and capital costs incurred to expand or upgrade the transmission
24 grid in order to connect the plant to the transmission grid and
25 includes costs that may be properly considered capital costs
26 associated with a plant under generally accepted principles of
27 regulatory or financial accounting, and specifically includes
28 AFUDC associated with a plant and capital costs associated with
29 facilities or investments for the transportation, delivery, storage,
30 and handling of fuel. ‘Capital costs’ or ‘plant capital costs’ shall
31 not include any costs from a plant which fails to commence
32 commercial operations, is abandoned, or is not in compliance with
33 previously approved construction schedules or previously
34 approved capital cost estimates. ‘Capital costs’ or ‘plant capital
35 costs’ also shall not include any costs from a plant where the utility
36 fails to prove the prudency of a challenged action or decision or if
37 the commission finds the utility withheld material information
38 related to the plant’s construction schedules or costs.
39 (6) ‘Combined application’ means a base load review
40 application which is combined with an application for a certificate
41 under the Utility Facility Siting and Environmental Protection Act,
42 or which involves a plant located outside of the State of South

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 1 Carolina, and at the utility’s option may be combined with an
2 application for new electric rates under Section 58-27-860.
3 (7) ‘Combined proceeding’ means a proceeding to consider all
4 aspects of a combined application.
5 (8)(5) ‘Construction work in progress’ means capital costs as
6 defined above associated with a base load plant which have been
7 incurred but have not been included in the utility’s
8 plant-in-service. ‘Construction work in progress’ shall not include
9 any costs from a plant which fails to commence commercial
10 operations, is abandoned, or is not in compliance with previously
11 approved construction schedules or previously approved capital
12 cost estimates. ‘Construction work in progress’ also shall not
13 include any costs from a plant where the utility fails to prove the
14 prudency of a challenged action or decision or where the
15 commission finds the utility withheld material information related
16 to the plant’s construction schedules or costs.
17 (9)(6) ‘General rate proceeding’ means a proceeding under
18 Section 58-27-810 and other applicable provisions for the
19 establishment of new electric rates and charges, and where orders
20 in general rate proceedings are referenced in this article, these
21 orders include rate orders issued in proceedings or combined
22 proceedings under this article.
23 (7) ‘Imprudent’ or ‘imprudence’ includes, but is not limited to,
24 the lack of caution, care, and diligence. Imprudent or imprudence
25 includes, but does not require, a finding of negligence or
26 recklessness.
27 Imprudence on behalf of any contractor, subcontractor, agent, or
28 person hired to construct a plant shall be attributed to the utility.
29 Imprudence includes, but is not limited to, any one or more of
30 the following:
31 (a) failure to timely disclose and provide to the commission
32 or the Office of Regulatory Staff any report, study, analysis, or
33 written communication material to a particular project prepared by
34 a third party it engaged or caused to be engaged and furnished to
35 the utility which brings into question the management, supervision,
36 or oversight of the project, the budgeted costs of the project, the
37 performance of contractors or subcontractors on the project, or the
38 scheduled completion date of the project;
39 (b) imbalance of the original cost estimates of the project as
40 made by the utility as compared with the final cost estimates or
41 anticipated cost estimates of the project. Where the actual costs of
42 the project to date or the anticipated costs of the project at its
43 completion exceeds one hundred twenty percent or more of the

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 1 utility’s original cost estimates of the project, it may be presumed
2 that imprudence on the part of the utility is present;
3 (c) inappropriate or poor management or oversight decisions
4 in the construction or operation of the project including failure to
5 keep knowledgeable utility management or supervisory personnel
6 on the project site to ensure proper supervision and oversight of
7 the project and its construction;
8 (d) failure of the utility to act in the general public interest in
9 management and oversight decisions in the acquisition,
10 construction, or operation of the project as determined by the
11 commission;
12 (e) the acceptance of risks in the construction of the project
13 which are inappropriate to the general public interest of the State
14 of South Carolina as determined by the commission; and
15 (f) any other fact, factor, or relationship which indicates the
16 lack of prudence as defined in this section as determined by the
17 commission.
18 Imprudent or imprudence as used in this article includes the
19 presence of one or more of the factors enumerated in this item
20 which have occurred since the base load review order or project
21 development order and its attendant finding of prudency.
22 The utility shall bear the burden of proving the prudency of each
23 individual action or decision challenged. If the utility fails to
24 prove prudency as it relates to any individual action or decision, all
25 costs incurred relating to the project are deemed imprudent. The
26 Office of Regulatory Staff may challenge as imprudent any action
27 or decision relating to the project or in the context of the entire
28 project.
29 (10) ‘In-service expenses’ means reasonably projected expenses
30 recognized under generally accepted principles of regulatory and
31 financial accounting as a result of a plant commencing commercial
32 operation, including:
33 (a) expenses associated with operating and maintaining a
34 plant, as well as taxes and governmental charges applicable to the
35 plant including taxes other than income taxes;
36 (b) depreciation and amortization expenses related to the
37 plant;
38 (c) revenue requirements related to the utility’s cost of
39 capital applied to the investment in supplies, inventories, and
40 working capital associated with the plant; and
41 (d) other costs determined by the commission to be
42 appropriate for ratemaking purposes. In-service expenses include,
43 but are not limited to, labor, supplies, insurance, general and

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 1 administrative expenses, and the cost of outside services, but do
2 not include costs recovered as fuel costs pursuant to Section
3 58-27-865.
4 (11)(8) ‘Person’ means any individual, group, firm, partnership,
5 or corporation.
6 (12) ‘Preconstruction costs’ means all costs associated with a
7 potential nuclear plant incurred before issuance of a final
8 certificate under the Utility Facility Siting and Environmental
9 Protection Act, including, without limitation, the costs of
10 evaluation, design, engineering, environmental and geotechnical
11 analysis and permitting, contracting, other required permitting
12 including early site permitting and combined operating license
13 permitting, and initial site preparation costs and related consulting
14 and professional costs, and shall include AFUDC associated with
15 those costs. For potential nuclear plants located in other states, the
16 costs must be those incurred before issuance of a certificate by the
17 host state under statutes comparable to the Utility Facility Siting
18 and Environmental Protection Act.
19 (13) ‘Proceeding’ means the proceeding to consider an
20 application filed under this chapter.
21 (14) ‘Project development application’ means an application for
22 a project development order.
23 (15)(9) ‘Project development order’ means an order establishing
24 the prudence of a utility’s decision to incur preconstruction costs
25 associated with a nuclear plant or potential nuclear plant.
26 (16) ‘Return on equity’ means the return on common equity
27 established in the base load review order for a plant. But, if the
28 order in the utility’s most recent general rate proceeding was
29 issued no more than five years before the date of filing of the
30 application or combined application, or if such an order is issued
31 after the application, combined application or base load review
32 order related to the plant is filed, then at the utility’s option, the
33 rate of return on common equity established in that order shall be
34 the rate of return used for computing future rate revisions under
35 this article. A project-specific return on equity set hereunder shall
36 apply exclusively to the establishment of the weighted average
37 cost of capital under this article and shall not be used for reporting
38 or any other purpose.
39 (17) ‘Revised rates’ means a revised schedule of electric rates
40 and charges reflecting a change to the utility’s then current nonfuel
41 rates and charges to add incremental revenue requirements related
42 to a base load plant as authorized in this article. For a nuclear plant
43 under construction, until it enters commercial operation the rate

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 1 adjustments related to the plant shall include recovery of the
2 weighted average cost of capital applied to the outstanding balance
3 of capital costs of that plant only and shall not include depreciation
4 or other items constituting a return of capital to the utility. For a
5 coal plant, no revised rates shall be allowed except that an
6 adjustment under Section 58-33-280(J)(1) shall be permitted to
7 take effect on or after the date commercial operations of the plant
8 commence.
9 (18) ‘Revised rates order’ means an order issued by the
10 commission approving, modifying, or denying the utility’s request
11 to charge revised rates under this article, which revised rates order
12 an aggrieved party may contest in an adversarial hearing before the
13 commission.
14 (19) ‘Revised rates proceedings’ means all proceedings to
15 consider an application for revised rates or review of a revised
16 rates order.
17 (10) ‘Prudent’ or ‘prudence’ means and requires a high standard
18 of care in making decisions and taking actions in order to protect
19 the public interest.
20 In the context of this article, it means a high standard of caution,
21 care, and diligence in regard to any action or decision taken by the
22 utility or one acting on its behalf including, but not limited to, its
23 officers, board, agents, employees, contractors, subcontractors,
24 consultants affecting the project or any other person acting on
25 behalf of or for the utility affecting the project.
26 A finding of prudency may be revisited where new information
27 comes available to the commission relating to the prudency finding
28 that was unavailable to the commission at the time the decision
29 was made. Prudency is required in the context of the project as a
30 whole and also as it relates to each individual action or decision
31 affecting the project.
32 To the extent a utility enters a contract with a third party that
33 delegates some or all decision-making authority related to the
34 project, the utility retains the burden of establishing the prudency
35 of specific items of cost or specific third party decisions.
36 (20)(11) ‘Utility’ means a person owning or operating
37 equipment or facilities for generating, transmitting, or delivering
38 electricity to South Carolina retail customers for compensation but
39 it shall not include electric cooperatives, municipalities, the South
40 Carolina Public Service Authority, or a person furnishing
41 electricity only to himself, itself, its residents, employees, or
42 tenants when the electricity is not resold or used by others. In the
43 context of prudency determinations, ‘utility’ includes all

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 1 contractors, subcontractors, and other persons acting on behalf of
2 the utility.
3 (21) ‘Utility Facility Siting and Environmental Protection Act’
4 means Section 58-33-10 and other applicable provisions of this
5 chapter.
6 (22)(12) ‘Weighted average cost of capital’ or ‘cost of capital’
7 means the utility’s average cost of debt and equity capital:
8 (a) incorporating the return on equity;
9 (b) incorporating the utility’s current weighted average cost
10 of debt;
11 (c) weighting (a) and (b) according to the utility’s capital
12 structure for ratemaking purposes, as established in the order in the
13 utility’s last general rate proceeding, updated to reflect the utility’s
14 current levels of debt and equity capital; and
15 (d) adjusting the result for the effect of income taxes.
16
17 Section 58-33-225. (A) The provisions of this section apply to
18 the preconstruction costs of a nuclear-powered facility.
19 (B) At any time before the filing of an application or a
20 combined application under this act related to a specific plant, a
21 utility may file a project development application with the
22 commission and the office of regulatory staff.
23 (C) In a project development application, the utility shall:
24 (1) describe the plant being considered and shall designate:
25 (a) the anticipated generation capacity (or range of
26 capacity) of the plant; and
27 (b) the projected annual capacity factors or range of
28 factors of the plant;
29 (2) provide information establishing the need for the
30 generation capacity represented by the potential plant and the need
31 for generation assets with the indicative annual capacity factors of
32 the potential plant;
33 (3) provide information establishing the reasonableness and
34 prudence of the potential fuel sources and potential generation
35 types that the utility is considering for the plant; and
36 (4) provide such other information as may be required to
37 establish that the decision to incur preconstruction costs related to
38 the potential nuclear plant is prudent considering the information
39 known to the utility at the time and considering the other
40 alternatives available to the utility for supplying its generation
41 needs.
42 (D) The commission shall issue a project development order
43 affirming the prudency of the utility’s decision to incur

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 1 preconstruction costs for the nuclear plant specified in the
2 application if the utility demonstrates by a preponderance of
3 evidence that the decision to incur preconstruction costs for the
4 plant is prudent. In issuing its project development order, the
5 commission may not rule on the prudency or recoverability of
6 specific items of cost, but shall rule instead on the prudency of the
7 decision to incur preconstruction costs for the nuclear plant
8 described in Section 58-33-225(C)(1).
9 (E) Unless the record in a subsequent proceeding shows that
10 individual items of cost were imprudently incurred, or that other
11 decisions subsequent to the issuance of a project development
12 order were imprudently made considering the information
13 available to the utility at the time they were made, then all the
14 preconstruction costs incurred for the potential nuclear plant must
15 be properly included in the utility’s plant-in-service and must be
16 recoverable fully through rates in future proceedings under this
17 chapter.
18 (F) To the extent that a party in a general rate proceeding or
19 revised rates proceeding establishes the imprudence of specific
20 items of cost or of specific decisions made subsequent to the
21 issuance of a project development order as set forth in Section
22 58-33-225(E), then the commission may disallow the resulting
23 costs but only to the extent that a prudent utility would have
24 avoided those costs considering the information available to the
25 utility at the time when they were incurred or the decisions at issue
26 were made.
27 (G) If the utility decides to abandon the project after issuance of
28 a prudency determination in the base load review order or project
29 development order, the provisions of Chapter 34, Title 58 apply;
30 provided, however, that if a court of competent jurisdiction
31 determines that it is unconstitutional or unlawful to apply the
32 provisions of Chapter 34, Title 58 in this particular situation, then
33 the provisions of Section 58-33-280(A) apply. under this section,
34 then the preconstruction costs related to that project may be
35 deferred, with AFUDC being calculated on the balance, and may
36 be included in rates in the utility’s next general rate proceeding or
37 revised rates proceeding, provided that as to the decision to
38 abandon the plant, the utility shall bear the burden of proving by a
39 preponderance of the evidence that the decision was prudent.
40 Without in any way limiting the effect of Section 58-33-225(D),
41 recovery of capital costs and the utility’s cost of capital associated
42 with them may be disallowed only to the extent that the failure by
43 the utility to anticipate or avoid the allegedly imprudent costs, or to

[4375] 14
 1 minimize the magnitude of the costs, was imprudent considering
2 the information available at the time that the utility could have
3 acted to avoid or minimize the costs. Pending an order in the
4 general rate proceeding or revised rates proceeding, the utility, at
5 its discretion, may commence to amortize to cost of service the
6 balance of the preconstruction costs related to the abandoned
7 project over a period equal to the period during which the costs
8 were incurred, or five years, whichever is greater.
9 (H) Prudency determinations under Section 58-33-225(D) may
10 not be challenged or reopened in any subsequent proceeding
11 including proceedings under Section 58-27-810 and other
12 applicable provisions and Section 58-33-220 and other applicable
13 provisions of this article.
14 (I) At any time after an initial project development order has
15 been issued, a utility may file an amended project development
16 application seeking a determination of the prudency of the utility’s
17 decision to continue to incur preconstruction costs considering
18 changed circumstances or changes in the type or location of
19 nuclear plant that the utility is pursuing or considering other
20 characteristics or decisions related to the plant. The amended
21 project development application must be considered in a separate
22 docket; however, the testimony and other evidence of the prior
23 docket must be considered to be part of the new docket.
24 (J) Pursuant to Section 58-33-240, the commission shall enter
25 an order granting or denying a project development order or
26 amended project development order within six months of the filing
27 of the application. If the commission fails to issue an order within
28 the period prescribed in this section, a party may move that the
29 commission issue an order granting or denying the application. If
30 the commission fails to issue an order within ten days after the
31 motion is served, the application will be considered granted.
32
33 Section 58-33-230. (A) Any utility proposing to construct a
34 plant, individually or jointly with other parties, may elect to come
35 under the terms of this article by filing an application or combined
36 application with the commission, and by serving a copy of that
37 application or combined application on the Office of Regulatory
38 Staff.
39 (B) If the plant is to be located in South Carolina and no
40 application for a certificate under the Utility Facility Siting and
41 Environmental Protection Act has previously been granted or is
42 then pending, the utility shall file a combined application under
43 this article.

[4375] 15
 1 (C) If the plant is to be located outside South Carolina but will
2 serve retail customers in this State, the utility shall file a combined
3 application, but as to the Utility Facility Siting and Environmental
4 Protection Act, the combined application shall address only the
5 requirements of Section 58-33-160(1)(a), (d), and (f), and
6 information pertaining to the environmental impacts of the plant
7 may not be included in the combined application. In issuing the
8 resulting order as to the Utility Facility Siting and Environmental
9 Protection Act, the commission shall make the determinations
10 required under Section 58-33-160(1)(a), (d) and (f) only.
11 (D) For plants located outside South Carolina that will serve
12 retail customers in this State, the issuance of a certificate for the
13 plant by the host state after a review of issues comparable to those
14 considered under Section 58-33-160(1)(a), (d) and (f) of the Utility
15 Facility Siting and Environmental Protection Act shall create a
16 rebuttable presumption that the requirements of those sections are
17 satisfied.
18 (E) An application or combined application may be combined
19 with a general rate proceeding application at the utility’s option.
20 (F) The Office of Regulatory Staff shall safeguard the public
21 interest in all matters arising under this article. It shall have full
22 audit rights related to all matters arising under this article and shall
23 review the reasonableness and necessity of all costs to be
24 recovered under this article.
25
26 Section 58-33-235. (A) On and after the effective date of this
27 section, no electricity rate increases may be imposed or approved
28 and no costs may be recovered through rate increases or otherwise
29 from the ratepayers for preconstruction costs, construction work in
30 progress costs, capital costs, AFUDC expenses, finance charges
31 for the payment of debt service relating to these costs or any other
32 costs in regard to base load plants which are not used and useful in
33 service to the public. The General Assembly declares that the
34 revised provisions of this article are intended to clarify previously
35 undefined terms consistent with what was intended in the original
36 enactment of this article, to supplement previously uncodified
37 standards or requirements consistent with the General Assembly’s
38 original intent, and to set out procedural requirements and
39 guidance for the commission to follow when administering those
40 electricity rate increases which were previously approved and
41 imposed under this article.
42 (B) If a construction project under this article is abandoned, the
43 Office of Regulatory Staff shall file a petition to remove rate

[4375] 16
 1 increases previously approved by the commission related to the
2 project. If such a filing occurs, the commission, after hearing and
3 notice, may issue a temporary order requiring new revised rates to
4 take effect immediately which shall remain in effect during any
5 appeals and which shall not include any of the previously granted
6 rate increases under this article pending the final outcome
7 including appeals of the filing by the Office of Regulatory Staff, if
8 the commission finds in its temporary order that the utility acted or
9 there is a reasonable possibility that the utility may have acted with
10 imprudence as defined in this article in any aspect of the project
11 since the base load review order or project development order.
12 The temporary order shall not include any of the costs referenced
13 in subsection (A).
14 (C) This section applies to any actions, cases, or petitions
15 pending on or after the effective date of this section.
16
17 Section 58-33-240. (A) Except as otherwise specified in this
18 article, all procedural requirements that apply to general rate
19 proceedings by law or regulation shall apply to rate proceedings
20 and combined proceedings, to revised rates proceedings, and to the
21 judicial review of orders issued under this article. The
22 requirements related to the form and content of applications in
23 general rate proceedings, however, only shall apply to proceedings
24 or combined proceedings which include an application for new
25 electric rates under Section 58-27-860 and only shall apply to that
26 part of the application or combined application which is filed
27 under Section 58-27-860.
28 (B) As to combined proceedings, the procedural requirements
29 related to general rate proceedings shall control over any
30 inconsistent provisions in other statutes; provided, however, that
31 provisions of Section 58-33-140 of the Utility Facility Siting and
32 Environmental Protection Act related to parties and appearances
33 shall apply to proceedings involving facilities located in this State
34 to the extent parties seek to appear to raise issues arising under that
35 act.
36 (C) In proceedings to review revised rates orders, no further
37 notice to the public, customers, and others is required additional to
38 that provided upon filing of the proceeding or combined
39 proceeding. In proceedings to review revised rates orders, the
40 utility’s revised rates filing shall serve as the application and the
41 utility must be considered to be the applicant.
42 (D)(B) In proceedings and combined proceedings, The utility
43 shall have the burden of proving that the decision to build the plant

[4375] 17
 1 was prudent, and by a preponderance of the evidence shall have
2 the burden of proof as to all matters on which the commission is
3 required to enter findings under Section 58-33-270(A), (B), (C),
4 (D), and (E). Without in any way limiting the conclusive effect of
5 determinations under Section 58-33-225 and Section 58-33-275, in
6 cases where this statute allows a party to challenge the prudency of
7 any transaction, cost, or decision of the utility, that party shall be
8 required to make a prima facie case establishing imprudence, and
9 thereafter the burden of proof shall shift to the utility to
10 demonstrate the prudence of the transaction cost, or decision by a
11 preponderance of the evidence. In addition, in proceedings
12 concerning rate increases previously approved under the
13 provisions of this article, the utility by a preponderance of the
14 evidence shall have the burden of proving and must prove that its
15 decision to build the plant and all other decisions it made,
16 including decisions and actions of contractors and subcontractors
17 regarding the plant after issuance of the based load review order or
18 the project development order were prudent as it relates to each
19 individual cost and decision and as it relates to the project as a
20 whole in order for these previously approved rate increases to
21 continue after the provisions of Section 58-33-235 take effect.
22 (E) In proceedings and combined proceedings, the deadlines
23 contained in Section 58-27-870(B) and (C) shall be nine months.
24
25 Section 58-33-250. The application for a base load review order
26 under this article shall include:
27 (1) information showing the anticipated construction schedule
28 for the plant;
29 (2) information showing the anticipated components of capital
30 costs and the anticipated schedule for incurring them;
31 (3) information showing the projected effect of investment in the
32 plant on the utility’s overall revenue requirement for each year
33 during the construction period;
34 (4) information identifying:
35 (a) the specific type of units selected for the plant;
36 (b) the suppliers of the major components of the plant; and
37 (c) the basis for selecting the type of units, major components,
38 and suppliers;
39 (5) information detailing the qualification and selection of
40 principal contractors and suppliers, other than those listed in item
41 (4)(c) above, for construction of the plant;
42 (6) information showing the anticipated in-service expenses
43 associated with the plant for the twelve months following

[4375] 18
 1 commencement of commercial operation adjusted to normalize any
2 atypical or abnormal expense levels anticipated during that period;
3 (7) information required by Section 58-33-270(B)(6);
4 (8) information identifying risk factors related to the
5 construction and operation of the plant;
6 (9) information identifying the proposed rate design and class
7 allocation factors to be used in formulating revised rates;
8 (10) information identifying the return on equity proposed by
9 the utility pursuant to Section 58-33-220(16); and
10 (11) the revised rates, if any are requested, that the utility
11 intends to put in place after issuance of the resulting base load
12 review order.
13
14 Section 58-33-260. Combined application; contents.
15 (A) A combined application must contain:
16 (1) an introduction;
17 (2) material required by law or regulation to be contained in
18 an application filed under the Utility Facility Siting and
19 Environmental Protection Act, except that combined applications
20 associated with plants located outside South Carolina shall address
21 only Section 58-33-160(1)(a), 58-33-160(1)(d), and 58-33-160(1)
22 (f) and information pertaining to the environmental impacts of the
23 plant may not be included in the combined application;
24 (3) the material required by law or regulation to be contained
25 in an application under this article, including the material required
26 under Section 58-33-250;
27 (4) if combined with a general rate proceeding, the material
28 required to be filed by law or regulation in applications for the
29 establishment of new rates under Section 58-27-860; and
30 (5) if the plant is located outside South Carolina, a copy of the
31 order from the host state granting a certificate or other
32 authorization similar to that granted under the Utility Facility
33 Siting and Environmental Protection Act.
34 (B) Where the same information is required in different sections
35 of the combined application, it may be set forth once and
36 cross-referenced as appropriate.
37
38 Section 58-33-270. (A) After the hearing, the commission
39 shall issue a base load review order approving rate recovery for
40 plant capital costs if it determines:
41 (1) that the utility’s decision to proceed with construction of
42 the plant is prudent and reasonable considering the information
43 available to the utility at the time;

[4375] 19
 1 (2) for plants located in this State, that the utility has
2 satisfied the requirements of Section 58-33-160 of the Utility
3 Facility Siting and Environmental Protection Act, either in a past
4 proceeding or in the current proceeding if the current proceeding is
5 a combined proceeding; and
6 (3) for plants located outside South Carolina, that the utility
7 has satisfied the requirements of Section 58-33-160(1)(a),
8 58-33-160(1)(d), and 58-33-160(1)(f) of the Utility Facility Siting
9 and Environmental Protection Act.
10 (B)The base load review order shall establish:
11 (1) the anticipated construction schedule for the plant
12 including contingencies;
13 (2) the anticipated components of capital costs and the
14 anticipated schedule for incurring them, including specified
15 contingencies;
16 (3) the return on equity established in conformity with
17 Section 58-33-220(16);
18 (4) the choice of the specific type of unit or units and major
19 components of the plant;
20 (5) the qualification and selection of principal contractors
21 and suppliers for construction of the plant; and
22 (6) the inflation indices used by the utility for costs of plant
23 construction, covering major cost components or groups of related
24 cost components. Each utility shall provide its own indices,
25 including: the source of the data for each index, if the source is
26 external to the company, or the methodology for each index which
27 is compiled from internal utility data, the method of computation
28 of inflation from each index, a calculated overall weighted index
29 for capital costs, and a five-year history of each index on an annual
30 basis.
31 (C) If revised rates are requested, the base load review order
32 shall specify initial revised rates reflecting the utility’s current
33 investment in the plant which must be determined using the
34 standards set forth in Section 58-33-280(B) and implemented
35 according to Section 58-33-280(D).
36 (D) The base load review order shall establish the rate design
37 and class allocation factors to be used in calculating revised rates
38 related to the plant. In establishing revised rates, all factors,
39 allocations, and rate designs shall be as determined in the utility’s
40 last rate order or as otherwise previously established by the
41 commission, except that the additional revenue requirement to be
42 collected through revised rates shall be allocated among customer

[4375] 20
 1 classes based on the utility’s South Carolina firm peak demand
2 data from the prior year.
3 (E) As circumstances warrant, the utility may petition the
4 commission, with notice to the Office of Regulatory Staff, for an
5 order modifying any of the schedules, estimates, findings, class
6 allocation factors, rate designs, or conditions that form part of any
7 base load review order issued under this section. The commission
8 shall grant the relief requested if, after a hearing, the commission
9 finds:
10 (1) as to the changes in the schedules, estimates, findings, or
11 conditions, that the evidence of record justifies a finding that the
12 changes are not the result of imprudence on the part of the utility;
13 and
14 (2) as to the changes in the class allocation factors or rate
15 designs, that the evidence of record indicates the proposed class
16 allocation factors or rate designs are just and reasonable.
17 (F) The commission shall consider a request under Section
18 58-33-270(E) in a new docket which pursuant to Section
19 58-33-240 must be subject to the requirement that the relief
20 requested in this article is considered granted if not denied by
21 order within six months of the date of filing. If the commission
22 fails to issue an order within the period prescribed in this section, a
23 party may move that the commission issue an order granting or
24 denying the application. If the commission fails to issue an order
25 within ten days after the motion is served, the application will be
26 considered granted.
27 (G) The commission promptly shall schedule a hearing to
28 consider any settlement agreement entered into between the Office
29 of Regulatory Staff, as the party representing the public interest in
30 the proceedings, and the utility applicant, provided that all parties
31 shall have been given a reasonable opportunity to conduct
32 discovery in the docket by the time the hearing is held. The
33 commission may accept the settlement agreement as disposing of
34 the matter, and issue an order adopting its terms, if it determines
35 that the terms of the settlement agreement comport with the terms
36 of this act.
37 (A) Nothing contained in this article limits the authority of the
38 commission to disallow prospectively all rate increases previously
39 granted or approved in accordance with the provisions of this
40 article where the commission later receives, discovers, or is
41 provided with information or documentation that the utility acted
42 imprudently as it relates to any action or decision pertaining to the

[4375] 21
 1 project since the base load review order or project development
2 order and its attendant finding of prudency.
3 (B) For as long as rates imposed and approved under this article
4 remain in effect and in addition to all other provisions in this
5 article relating to prudency or the lack thereof, the commission,
6 upon receipt or discovery of material information relating to the
7 prudency of any decisions or actions related to the project or the
8 discovery that previous information was withheld or inaccurately
9 provided, shall make a determination after hearing and notice in
10 regard to whether or not the utility acted imprudently since the
11 base load review order or project development order based on this
12 new information.
13 (C) The commission’s finding of prudence in proceedings
14 under this article does not preclude a finding of imprudence at a
15 later stage. If a finding of imprudence occurs at a later stage, any
16 act of subsequent imprudence means that the utility has not acted
17 prudently with regard to the project justifying the cancellation
18 prospectively of any rate increases previously approved under the
19 provisions of this article.
20 (D) Upon disallowance of a previously approved rate increase,
21 the preconstruction costs, construction work in progress costs,
22 capital costs, AFUDC expenses, and finance charges for the
23 payment of debt service related to these costs associated with the
24 base load project cannot be included in future rate bases and the
25 project cannot be considered to be ‘properly held for future use’
26 for purposes of future rate determinations.
27
28 Section 58-33-275. (A) A base load review order shall
29 constitute a final and binding determination that a plant is upon
30 completion and placed into service will be used and useful for
31 utility purposes, and that its capital costs unless subsequent
32 evidence of imprudency is found are prudent utility costs and
33 expenses and are properly included in approved rates so long as
34 the plant is constructed or is being constructed within the
35 parameters of:
36 (1) the approved construction schedule including
37 contingencies; and
38 (2) the approved capital costs cost estimates including
39 specified contingencies.
40 (B) Determinations under Section 58-33-275 subsection (A)
41 may not be challenged or reopened in any subsequent proceeding,
42 including proceedings under Section 58-27-810 and other

[4375] 22
 1 applicable provisions and Section 58-33-280 and other applicable
2 provisions of this article unless there is evidence that:
3 (1) the plant is being constructed or forecasted to be
4 constructed outside the parameters of the approved construction
5 schedule or the approved cost estimates;
6 (2) information material to the project was withheld from the
7 commission or the Office of Regulatory Staff; or
8 (3) any decisions or actions taken by the utility or third
9 parties acting on behalf of the utility were imprudent.
10 If the commission finds there is any evidence supporting the
11 factors enumerated in items (1), (2), and (3) of this subsection or if
12 there is evidence of imprudency as determined under subsection
13 (A), these determinations may be challenged or reopened at any
14 time. In addition, judicial review of the commission’s decisions or
15 orders including those of prudency or lack of prudency by the
16 utility in regard to the project is permitted in the manner provided
17 by Section 58-33-310 and 58-33-320.
18 (C) So long as the plant is constructed or being constructed in
19 accordance with the approved schedules, estimates, and projections
20 set forth in Section 58-33-270(B)(1) and 58-33-270(B)(2), as
21 adjusted by the inflation indices set forth in Section 58-33-270(B)
22 (5), the utility must be allowed to recover its capital costs related
23 to the plant through revised rate filings or general rate proceedings.
24 (D) Changes in fuel costs will not be considered in conducting
25 any evaluation under this section.
26 (E) In cases where a party proves by a preponderance of the
27 evidence that there has been a material and adverse deviation from
28 the approved schedules, estimates, and projections set forth in
29 Section 58-33-270(B)(1) and 58-33-270(B)(2), as adjusted by the
30 inflation indices set forth in Section 58-33-270(B)(5), the
31 commission may disallow the additional capital costs that result
32 from the deviation, but only to the extent that the failure by the
33 utility to anticipate or avoid the deviation, or to minimize the
34 resulting expense, was imprudent considering the information
35 available at the time that the utility could have acted to avoid the
36 deviation or minimize its effect.
37
38 Section 58-33-277. (A) After issuance of a base load review
39 order approving rate recovery for capital costs related to the plant,
40 the utility will file reports with the Office of Regulatory Staff
41 quarterly until the plant begins commercial operation. These
42 reports must be filed no later than forty-five thirty days after the

[4375] 23
 1 close of a quarter, shall not be combined with any other filing, and
2 shall contain the following information:
3 (1) the progress of construction of the plant;
4 (2) updated construction schedules;
5 (3) schedules of the capital costs incurred including updates
6 to the this information required by Section 58-33-270(B)(5);
7 (4) updated schedules of the anticipated capital costs; and
8 (5) other information as the Office of Regulatory Staff may
9 require.
10 These reports must be filed under oath by an officer of the utility
11 authorized to file the reports.
12 (B) The Office of Regulatory Staff shall conduct on-going
13 monitoring of the construction of the plant and expenditure of
14 capital through review and audit of the quarterly reports under this
15 article, and shall have the right to inspect the books and records
16 regarding the plant and the physical progress of construction upon
17 reasonable notice to the utility shall have independent access to the
18 construction site.
19
20 Section 58-33-280. (A) No earlier than one year after filing the
21 application or combined application, and no more frequently than
22 annually thereafter, the utility may file with the commission and
23 serve on the Office of Regulatory Staff requests for the approval of
24 revised rates subsequent to those approved in the base load review
25 order.
26 (B) A utility must be allowed to recover through revised rates
27 its weighted average cost of capital applied to all or, at the utility’s
28 option, part of the outstanding balance of construction work in
29 progress, calculated as of a date specified in the filing. Any
30 construction work in progress not included in any specific filing
31 for revised rates shall continue to earn AFUDC and may be
32 included in rates through future filings. The revised rates filing
33 shall include the most recent monitoring report filed under Section
34 58-33-277(A) updated to reflect information current as of the date
35 specified in the filing.
36 (C) Written comments to the commission and the Office of
37 Regulatory Staff concerning the revised rates and the information
38 supporting them shall be allowed within one month of the revised
39 rates filing.
40 (D) The Office of Regulatory Staff shall review and audit the
41 revised rates and the information supporting them to determine
42 their compliance with the terms of this article. No later than two
43 months after the date of the revised rates filing, the Office of

[4375] 24
 1 Regulatory Staff shall serve on the commission and all intervenors
2 and parties of record a report indicating the results of its review
3 and audit and proposing any changes to the revised rates or the
4 information supporting them that the Office of Regulatory Staff
5 determines to be necessary to comply with the terms of this article.
6 (E) Written comments related to the report may be filed with
7 the commission within one month from the date of the filing of the
8 report. Comments must be served on the Office of Regulatory
9 Staff and simultaneously mailed or electronically transmitted to the
10 utility and to all intervenors and parties of record who previously
11 appeared and filed comments. The Office of Regulatory Staff may
12 revise its report considering comments filed.
13 (F) No later than four months after the date of the revised rates
14 filing, the commission shall issue a revised rates order granting,
15 modifying, or denying revised rates as filed by the utility. In the
16 absence of such a revised rates order, the revised rates shall be
17 considered to be approved as filed. If the commission fails to issue
18 an order within the period prescribed in this section, a party may
19 move that the commission issue an order granting or denying the
20 application. If the commission fails to issue an order within ten
21 days after the motion is served, the application will be considered
22 granted.
23 (G) Where both Office of Regulatory Staff and the utility agree
24 in writing on the revised rates to be implemented, the commission
25 shall give substantial weight to the agreement in issuing its revised
26 rates order.
27 (H) If the utility is granted a rate increase in the revised rates
28 order, the utility shall provide notice to its customers with the next
29 billing. The utility may implement revised rates for bills rendered
30 on or after a date selected by the utility, which may not be sooner
31 than thirty days after revised rates are approved.
32 (I) Upon implementation of revised rates under this article, the
33 utility will cease to accrue AFUDC on that component of its
34 construction work in progress on which it is recovering its
35 weighted average cost of capital through revised rates.
36 (J) Other provisions of this article notwithstanding:
37 (1) The utility may file a final set of revised rates for a plant
38 to go into effect upon commercial operation of the plant, the filing
39 to be made no sooner than seven months before the projected date
40 that the plant is to commence commercial operations. In the final
41 revised rates the utility may include recovery of the weighted
42 average cost of capital applied to all or part of the capital costs
43 associated with the plant. In all cases, the decision to seek recovery

[4375] 25
 1 in revised rates of less than the full amount of its cost must be at
2 the utility’s sole discretion. Rate adjustments to reflect the revenue
3 requirements related to in-service expenses must be included in the
4 final revised rates and shall be based on the utility’s most current
5 budget estimates of those expenses for the succeeding
6 twelve-month period at the time the final revised rates are filed or
7 actual expenses, if available.
8 (2) If the commission rejects a revised rate filing on grounds
9 that may be corrected in a subsequent filing, or if the utility
10 withdraws a revised rate filing before a revised rates order is
11 issued, the utility may file a subsequent request for revised rates at
12 any time thereafter.
13 (3) The utility may seek to recover any capital costs,
14 in-service expenses, or other costs not included in revised rates
15 through future general rate proceedings.
16 (4) Revised rates shall not be allowed, under Section
17 58-33-270(C) or under Section 58-33-280, for coal plants located
18 in South Carolina that were certificated for construction under the
19 Utility Facility Siting and Environmental Protection Act before
20 December 31, 2007, or for coal plants located outside of South
21 Carolina if certificated under a state statute analogous to the Utility
22 Facility Siting and Environmental Protection Act before December
23 31, 2007.
24 (K)(A) Where a plant is abandoned after a base load review
25 order approving rate recovery has been issued, the capital costs and
26 AFUDC related to the plant shall nonetheless be recoverable under
27 this article provided that the utility shall bear the burden of proving
28 by a preponderance of the evidence that:
29 (1) the decision to abandon construction of the plant was
30 prudent;
31 (2) all actions and decisions, including those of any
32 subcontractors, contractors, or any other third party acting on
33 behalf of the utility, related to the construction of the plant were
34 prudent;
35 (3) all preconstruction costs, construction work in progress
36 costs, capital costs, AFUDC expenses and finance costs relating
37 the project are shown and proved to be prudently incurred;
38 (4) there was no imprudence on the part of the utility since
39 the base load review order or project development order;
40 (5) the utility’s decision to abandon was made in a prudent
41 and timely manner and the utility notified the commission and the
42 Office of Regulatory Staff of the decision in a prudent and timely
43 manner; and

[4375] 26
 1 (6) the utility avoided potential further costs to the
2 ratepayers upon the decision to abandon.
3 If the utility fails to prove any of these conditions, none of the
4 preconstruction costs, construction work in progress costs, capital
5 costs, AFUDC expenses, finance charges, and abandonment costs
6 may be recovered though rate increases or otherwise.
7 The provisions of this subsection apply in the manner and under
8 the conditions stipulated in Section 58-33-225.
9 Without limiting the effect of Section 58-33-275(A), recovery of
10 capital costs and the utility’s cost of capital associated with them
11 may be disallowed only to the extent that the failure by the utility
12 to anticipate or avoid the allegedly imprudent costs, or to minimize
13 the magnitude of the costs, was imprudent considering the
14 information available at the time that the utility could have acted to
15 avoid or minimize the costs. The commission shall order the
16 amortization and recovery through rates of the investment in the
17 abandoned plant as part of an order adjusting rates under this
18 article.
19 (L)(B) After completion or abandonment of a plant that is
20 subject to a base load review order, the Office of Regulatory Staff
21 shall conduct an audit of the utility revenues, expenses, and rates
22 consistent with the audits conducted of filings for new electric
23 rates under Section 58-27-860. The audit must be based on a
24 twelve-month test period ending concluded no later than December
25 thirty-first of the calendar year following the year in which the
26 plant entered commercial operation or no later than ninety days
27 after the plant was abandoned, and must be filed with all parties to
28 the base load review proceeding within four months of the
29 conclusion of the test period upon completion of the audit.
30
31 Section 58-33-285. (A) Within thirty days of the issuance of
32 a revised rates an order pursuant to Section 58-33-280(E) of this
33 article, or within thirty days of the failure by the commission to
34 issue a revised rates such an order as required pursuant to Section
35 58-33-280(E), any aggrieved party may petition the commission
36 for review of the revised rates order or of the failure to issue a
37 revised rates the order.
38 (B) The Office of Regulatory Staff and the utility must be
39 automatic parties to any proceedings under this section.
40 (C) In filing for intervention under this section, intervenors
41 shall identify with particularity the specific issues they intend to
42 raise with regard to the revised rates order.

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 1 (D) The party seeking review of the revised rates order shall
2 serve a copy of such petition on the Office of Regulatory Staff and
3 the utility on the same day and by the same means as it is provided
4 to the commission.
5 (E) Any filing under this section must be considered a new
6 proceeding subject to the provisions of Section 58-33-240. The
7 commission shall open a single new docket for all filings related to
8 any one set of revised rates filed under this article.
9 After an order or decision has been made by the commission,
10 any party to the proceedings, within ten days after service of notice
11 of the entry of the order or decision may apply for a rehearing in
12 respect to any matter determined in such proceedings and specified
13 in the application for rehearing, and the commission may, in case it
14 appears to be proper, grant and hold the rehearing. The
15 commission shall either grant or refuse an application for rehearing
16 within twenty days, and a failure by the commission to act upon
17 the application within that period must be considered a refusal of
18 the application. If the application is granted, the commission’s
19 order is considered vacated, and the commission shall enter a new
20 order after the rehearing has been concluded.
21
22 Section 58-33-287. (A) The commission shall issue its order
23 ruling upon a petition for review of a revised rates order within six
24 months. If the petition for review has been resolved among the
25 parties by settlement agreement, the commission shall consider
26 and accept or reject any settlement agreement entered into by the
27 parties within forty-five days. If a settlement agreement is reached
28 between some but not all parties, then the settlement agreement, if
29 approved by the commission, must be deemed to dispose of any
30 issues resolved in it that have not been raised by other parties to
31 the proceeding pursuant to Section 58-33-285(C).
32 (B) Proceedings pursuant to Section 58-33-285 are limited to
33 issues related to whether the revised rates filed by the utility
34 comply with the terms of the commission order issued pursuant to
35 Section 58-33-270 and with the specific requirements of Section
36 58-33-280. Matters determined in orders issued pursuant to the
37 Utility Facility Siting and Environmental Protection Act, Section
38 58-27-810, and other applicable provisions or Section 58-33-270
39 are not subject to review in proceedings under this section.
40 (C) In proceedings pursuant to Section 58-33-285, the
41 commission shall allow limited discovery, and restrict the issues
42 for discovery and hearing to whether the revised rates comply with
43 the terms of the commission order issued pursuant to Section

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 1 58-33-270 and compliance with the specific requirements of
2 Section 58-33-280.
3 (D) The commission shall issue such motions to strike,
4 protective orders, motions to quash, motions for costs and
5 sanctions, and other rulings as are necessary to enforce the terms
6 of this limitation.
7 (E) The commission shall dismiss as a party any intervenor
8 who, after notice, fails to abide by the limitations contained in this
9 section.
10 (F) The failure of the commission to enforce the terms of this
11 section may be remedied by petition for writ of mandamus or
12 supersedeas in the circuit court, which petition the court shall
13 advance over all other matters on its docket and hear on an
14 emergency basis, without the requirement of a formal answer or
15 other return, such hearing to be held as soon as practicable upon
16 twenty-four hours notice to the party against whom relief is
17 sought. Proceedings related to the petitions may not serve to stay
18 or delay proceedings before the commission.
19 (G) The commission shall issue a final order that:
20 (1) sets forth any changes that are required to the rates
21 approved in the revised rates order;
22 (2) determines the amount of any overcollection or
23 undercollection of the revenues by the utility that resulted from
24 application of the rates authorized in the revised rates order as
25 compared to the rates authorized in the final order issued under
26 this section; and
27 (3) establishes a credit to refund the amount of an
28 overcollection or a surcharge to collect the amount of an
29 undercollection of revenues that arose during the time that the rates
30 approved in the revised rates order, or imposed due to a failure of
31 the commission to issue a revised rates order, were applicable and
32 requires the utility to apply the credit or surcharge until such time
33 as the overcollection or undercollection is exhausted.
34 (H) If the final order increases the amount of capital costs for
35 which the utility may recover its weighted average cost of capital
36 through revised rates, the AFUDC booked on those capital costs
37 between the issuance of the revised rates order and the final order
38 shall remain on the books of the utility and shall not be reversed or
39 adjusted. Surcharges related to undercollection of costs must be
40 calculated without consideration of AFUDC amounts recognized
41 on the capital costs during this period.
42 (I) If the final order reduces the amount of capital cost for
43 which the utility may recover its weighted average cost of capital

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 1 through revised rates for reasons other than the conclusive finding
2 that the capital costs were imprudently incurred, then the utility
3 may resume accrual of AFUDC on any capital costs that were not
4 included in rate recovery and may book an amount of AFUDC
5 equal to the AFUDC not recognized during the time the rates
6 approved in the revised rates order were in effect.
7
8 Section 58-33-290. The denial of a project development
9 application, application, or combined application under this article
10 shall not preclude the utility from filing a new or amended project
11 development application, application, or combined application at
12 any time. A utility may proceed to construct a plant even if
13 assurance of prudency or cost recovery under this article is not
14 sought or is denied, and the failure to seek or obtain such an
15 assurance may not be used as evidence or precedent in any future
16 proceeding.
17
18 Section 58-33-295. (A) The Office of Regulatory Staff is
19 authorized to create additional positions for purposes of
20 performing its duties under this article as follows:
21 (1) two additional positions when there is one nuclear unit
22 that is subject to an application for a project development order, an
23 application or a combined application under this article, or that is
24 under construction or abandonment and eligible for entry of future
25 revised rates orders; and
26 (2) one additional position for each additional nuclear unit
27 thereafter.
28 The utility or utilities electing to file an application, project
29 development order, or combined application under this article shall
30 bear the costs associated with these positions, including all
31 salaries, benefits, expenses, and charges, in proportion to the
32 number of these units that they own in whole or in part as a
33 percentage of the total number of these units in the regulatory
34 process under this article at the time. The Office of Regulatory
35 Staff annually must certify to the Department of Revenue by May
36 first the amounts to be assessed. By July first of each year, the
37 Department of Revenue shall assess each utility for its assessment,
38 which assessment must be due and payable by July fifteenth. The
39 assessments must be charged against a utility by the Department of
40 Revenue and collected in the manner provided by law for the
41 collection of taxes from utilities, including the enforcement and
42 collection provisions of Article 1, Chapter 54, of Title 12, and paid
43 into the State Treasury as are other taxes collected by the

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 1 Department of Revenue for the State less the Department of
2 Revenue’s actual incremental increase in the cost of
3 administration. These assessments are in addition to any amounts
4 assessed pursuant to Sections 58-4-60 and 58-5-480 and must be
5 deposited in a special fund in the State Treasury from which the
6 salaries, benefits, expenses, and charges must be paid.
7 (B) The Executive Director of the Office of Regulatory Staff is
8 authorized to employ expert witnesses and other professional
9 engineering, construction, or other experts or consultants as the
10 executive director considers necessary to assist the regulatory staff
11 in its review and audit of project development order applications,
12 applications, combined applications, and applications for revised
13 rates orders; participation in proceedings under this article; and in
14 auditing and monitoring on-going construction of plants eligible
15 for revised rates orders. The compensation paid to these persons
16 may not exceed the compensation ordinarily paid by the regulated
17 industry for these specialists. Upon agreement between the utility
18 and the Office of Regulatory Staff or upon approval of the review
19 committee established under Section 58-3-20, the compensation
20 and expenses must be paid by the utility or utilities filing an
21 application under this article involved.
22 (C) Compensation and expenses paid by the utility under this
23 article must be treated as capital costs of the plant for ratemaking
24 purposes.
25
26 Section 58-33-297. The provisions of this article as revised in
27 the manner provided by this act apply to all cases, proceedings,
28 petitions, or matters pending on and after the effective date of this
29 section.
30
31 Section 58-33-298. Filings under this article may not be
32 considered in applying the limitations on rate filings contained in
33 Section 58-27-870(E).
34
35 Article 5
36
37 Judicial Review
38
39 Section 58-33-310. Any party to a proceeding under Article 4
40 may appeal, in accordance with Section 1-23-380, from all or any
41 portion of any final order or decision of the commission, including
42 conditions of the certificate required by a state agency under
43 Section 58-33-160 as provided by Section 58-27-2310. Any

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 1 appeals may be called up for trial out of their order by either party.
2 The commission must not be a party to an appeal.
3
4 Section 58-33-320. (A) Except as expressly set forth provided
5 in Section 58-33-310 and this section, no court of this State shall
6 have jurisdiction to hear or determine any issue, case, or
7 controversy concerning any matter arising or which should arise
8 under Article 4 of this chapter which was or could should have
9 first been determined in a proceeding before the commission under
10 this chapter or to stop or delay the construction, operation, or
11 maintenance of a major utility facility, except to enforce
12 compliance with this chapter or the provisions of a certificate
13 issued hereunder, and any such action shall be brought only by the
14 Office of Regulatory Staff. Provided, However, nothing herein
15 contained in this section shall must be construed to abrogate or
16 suspend the right of any individual or corporation not a party to
17 maintain any action which he might otherwise have been entitled.
18 (B) The commission in any order issued by it after the effective
19 date of this subsection where prudency or the lack of prudency on
20 the part of the utility is an issue shall state in the order whether or
21 not the actions or decisions of the utility were prudent or
22 imprudent in that particular instance and its reasons for the
23 findings in order to create a record which courts of competent
24 jurisdiction can consider on appeal. The provisions of this
25 subsection are enacted by the General Assembly in order to give
26 full effect to the provisions of Section 1, Article IX of the
27 Constitution of this State requiring the General Assembly t
28 regulate publicly owned utilities to the extent required by the
29 public interest in order to protect the public interest and safeguard
30 the general public from the failure to be prudent on the part of the
31 utility. As stated in Section 1(A), Act 16 of 2007, ‘The purpose of
32 Article 4, Chapter 33, Title 58, added by Section 2 of this act, is to
33 provide for the recovery of the prudently incurred costs associated
34 with new base load plants, as defined in Section 58 -33-220 of
35 Article 4, when constructed by investor -owned electrical utilities,
36 while at the same time protecting customers of investor -owned
37 electrical utilities from responsibility for imprudent financial
38 obligations or costs’.”
39
40 SECTION 4. Section 58-27-850 of the 1976 Code is amended to
41 read:
42

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 1 “Section 58-27-850. (A) Whenever the commission after a
2 hearing finds that the existing rates in effect and collected by any
3 electrical utility for any service, product, or commodity are unjust,
4 unreasonable, insufficient, unreasonably discriminatory, or in any
5 way in violation of any provision of law, the commission shall
6 determine the just, reasonable, and sufficient rates to be thereafter
7 observed and in force and shall fix the rates by its order.
8 (B) In determining rates for purposes of certain utility plants as
9 defined in Section 58-34-100(B)(2), the provisions of Chapter 34
10 shall supplement the provisions of this article and to the extent of
11 any conflict between Article 7, Chapter 27 and Chapter 34 of this
12 title, the provisions of Chapter 34 shall control.”
13
14 SECTION 5. Articles 1, 3, and 7 of Chapter 33, Title 58 of the
15 1976 Code are deleted. The caption to Chapter 33, Title 58 is
16 changed from “Utility Facility Siting and Environmental
17 Protection” to “Revised Base Load Review Act”.
18
19 SECTION 6. The provisions of this act must be liberally
20 construed to further the legislative intent of the General Assembly
21 as stated in this act.
22
23 SECTION 7. If any provision of this act is held or determined to
24 be unconstitutional, invalid, or otherwise unenforceable by a court
25 of competent jurisdiction, it is the intention of the General
26 Assembly that the provision is severable from the remaining
27 provisions of the chapter and that the holding does not invalidate
28 or render unenforceable another provision of the chapter.
29
30 SECTION 8. This act takes effect upon approval by the Governor
31 and applies to all cases, proceedings, petitions, or matters pending
32 on or after the effective date of this act.
33 ----XX----
34

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