South Carolina editorial roundup
Posted April 19
Recent editorials from South Carolina newspapers:
The Aiken Standard on BLRA reform:
Last week's briefing about how the recent Westinghouse bankruptcy will impact construction of two nuclear reactors — and ultimately the ratepayers of South Carolina — raised more questions than it answered.
We still don't know whether Westinghouse will remain for the long haul at the V.C. Summer Nuclear Facility. We don't know if the project will be completed. And there's no guarantee residential customers won't end up paying more money.
SCANA executives told members of the S.C. Public Service Commission at a hearing April 12 that its preference is to complete two AP1000 reactors at V.C. Summer, but couldn't guarantee that objective will be met.
They also signaled that a temporary deal creating a 30-day assessment period to keep work continuing at V.C. Summer could be extended another 30 or 60 days.
Executives also said that Westinghouse estimates it will cost an additional $1.5 billion to complete the reactors, which are already billions of dollars over budget. With Westinghouse taking out an $800 million line of credit as part of its Chapter 11 bankruptcy reorganization, it's hard to imagine where the additional $1.5 million will come from without SCANA turning to consumers for rate increase.
If SCANA seeks a rate increase, it will be the 10th electric rate increase since 2009 that the parent company of South Carolina Electric and Gas, which services most Aiken County residential customers, has sought.
It's important to note these rate hikes are completely separate from the SCE&G weather normalization adjustment, or WNA, which this past winter has caused gas bills to soar during the mild winter despite declining usage.
We hope we're wrong, but an electric rate increase seems inevitable. SCANA says there are sufficient assets for Westinghouse to meet its obligations, pointing to Toshiba possibly selling its financial interest in flash memory. Or it could sell Westinghouse altogether, SCANA officials said.
SCANA Chief Financial Officer Jimmy Addison told commissioners there are already potentially interested buyers.
More details about the potential impacts of Westinghouse's bankruptcy on ratepayers will surely arise next week. SCANA's first quarter report is due April 27, with a conference call with investors also scheduled that day. The 30-day assessment period expires the following day.
While SCANA and other stakeholders sort through the mess, we have a proposal for state lawmakers — it's time to take a second look at the Base Load Review Act, also known as BLRA.
SCANA says it lives by the BLRA. During last week's hearing, Addison lauded the act as a vital and integral part of the V.C. Summer project, saying it's mitigated the impact of Westinghouse's bankruptcy.
"It is of critical importance this approach continue given the uncertainty of the given moment," Addison said.
We disagree. All the BLRA does is allow utilities to shift the burden to ratepayers who are seeing zero return on their investment. V.C. Summer construction is only 34 percent complete (64 percent if you count engineering, procurement and startup). V.C. Summer hasn't generated 1 watt of power, yet SCANA rate hikes account for roughly 20 percent of a typical customer's power bill.
Meantime, V.C. Summer is billions over budget and facing $1.5 billion in additional costs, with completion now not expected until at least 2019, if at all. That's a lot of money to sink into a nuclear lemon.
Imagine the political fallout the S.C. General Assembly would face if it raised income taxes nine times without anything to show for it. There would be an utter meltdown if the governor and cabinet members got hefty raises like the $937,000 in pay increases SCANA executives received in 2016.
Whether or not SCANA finishes V.C. Summer, ratepayers are paying the price. If V.C. Summer is abandoned, their money will be wasted. If the project moves forward, higher power bills seem unavoidable, a conundrum caused by the BLRA.
Instead of allowing a system that zaps residential customers to persist, lawmakers must revise the BLRA to stop the madness behind senseless rate increases, especially if we've got nothing to show for them.
The Post and Courier of Charleston on the state's gas tax:
It really is uncanny how South Carolina's elected leaders manage to snatch defeat from the jaws of victory, year after year. It happened repeatedly with ethics reform, until a half-measure was finally approved last year. It's happened again and again on plans to increase the state's gas tax to help rebuild South Carolina's roads.
It's happening again.
That's why virtually all of the House of Representatives — Republicans and Democrats — joined Speaker Jay Lucas on Tuesday to demand action from the state Senate and Gov. Henry McMaster. It's a reasonable demand, considering the longstanding need for road improvement, repair and maintenance.
But it may be a forlorn hope, absent some quick action on a gas tax plan with enough support to override a promised gubernatorial veto. There are only 11 working days left in this year's session.
Gov. Henry McMaster, who assumed the job when Nikki Haley became U.N. ambassador, is taking the position that South Carolinians are taxed enough. That may play well at the polls next year, when Mr. McMaster faces challengers in the governor's race. But for better roads, it's bad policy.
South Carolina has a significant deficit in road improvements and increasing the gas tax is the best way to begin making necessary gains on that front.
And it bears repeating: South Carolina's gas tax is the second lowest in the country, and hasn't been raised in 30 years. Meanwhile, the state has one of the largest road networks in the nation. And because of the large numbers of tourists and travelers that visit or pass through South Carolina, many in the coastal area, nearly one-third of gas tax revenue is paid by out-of-state motorists.
The House has approved a straightforward increase in the gas tax — 10-cents a gallon in 2-cent increments each year for the next five years. It would raise another $600 million a year — not enough, but an improvement — in recurring funds that are dedicated to transportation.
The Senate has faltered on its plan to incrementally increase gas taxes to a total of 12-cents a gallon. And though the matter is being debated, a recovery may be too much to hope for, given the Senate's record for dithering into inaction at the end of the legislative session.
Meanwhile, Mr. McMaster's solution is to borrow $1 billion for road improvements. But public bonds have to be repaid with tax money. In this instance, the bonds would be repaid with general fund revenues that typically finance other important responsibilities of government, such as public education.
Didn't the governor say that South Carolinians are being taxed enough?
The House press conference might be better described as an official protest at the irresponsibility of allowing state roads to deteriorate, year after year.
Inaction has consequences: increased accidents, rising highway fatalities, higher repair costs, diminished economic health. Those consequences are substantially worse — indeed more costly — than paying a dime more for a gallon of gas. The Senate and Mr. McMaster need to put matters in perspective, and get on board with the House.
The Herald of Rock Hill on the merge of some school districts:
The proposal to merge some of the state's smaller school districts to save money and use resources more efficiently is worth exploring. But don't look for it to be a cheap and easy way to fix all the problems of poor, rural districts that have been unable to meet the needs of their students for decades.
The S.C. Department of Education released a study last week showing that consolidating smaller school districts could save tens of millions of dollars. The study focused on 32 rural districts that successfully sued the state in 1993, saying the state did not provide enough money to educate their children.
The study suggests that districts could save up to $35 million if they work in pairs to share administrative and transportation costs. Five school districts consolidating some services could save close to $90 million, the study found.
We remain skeptical that the savings would be that large. While reducing the number of administrators and packing more students onto buses could save money, the figures floated by this study seem overly optimistic.
S.C. Superintendent of Education Molly Spearman also notes that the state would likely have to provide incentives to encourage districts to consolidate.
Spearman said the state could make up the difference in teacher salaries between two merging school districts or give money to two districts that want new schools if they agree to merge and build only one.
To her credit, Spearman is not proposing to force mergers among districts. She said that while some lawmakers favor that approach, the idea has not received widespread support in the Legislature.
We agree that any effort to merge districts must have the support of the communities affected. In many cases, local schools are among the only remaining institutions that hold small communities together.
Sacrificing the individual identity of a community to save money on education could prove a difficult tradeoff. But if residents and local educators buy in, the effort could be worthwhile.
Again, however, this proposal is not a magic bullet to meet all the needs of crumbling schools in the so-called "Corridor of Shame." The state has an obligation — both legal and moral — to ensure that all students throughout South Carolina have access to an adequate education.
This legislative session, lawmakers have done little to answer a state Supreme Court order to improve public education in poor districts that have an inadequate tax base to meet the needs of students. Consolidation alone is not enough.