The following terms, when used in this article, shall have the following meanings, unless another meaning is clearly apparent from the context:
(1) "AFUDC" means the allowance for funds used during construction of a plant calculated according to regulatory accounting principles.
(2) "Base load plant" or "plant" means a new coal or nuclear fueled electrical generating unit or units or facility that is designed to be operated at a capacity factor exceeding seventy percent annually, has a gross initial generation capacity of three hundred fifty megawatts or more, and is intended in whole or in part to serve retail customers of a utility in South Carolina, and for a coal plant, includes Best Available Control Technology, as defined by the United States Environmental Protection Agency, for the control of air emissions.
(3) "Base load review application" or "application" means an application for a base load review order under the terms of this article.
(4) "Base load review order" means an order issued by the commission pursuant to Section 58-33-270 establishing that if a plant is constructed in accordance with an approved construction schedule, approved capital costs estimates, and approved projections of in-service expenses, as defined herein, the plant is considered to be used and useful for utility purposes such that its capital costs are prudent utility costs and are properly included in rates.
(5) "Capital costs" or "plant capital costs" means costs associated with the design, siting, selection, acquisition, licensing, construction, testing, and placing into service of a base load plant, and capital costs incurred to expand or upgrade the transmission grid in order to connect the plant to the transmission grid and includes costs that may be properly considered capital costs associated with a plant under generally accepted principles of regulatory or financial accounting, and specifically includes AFUDC associated with a plant and capital costs associated with facilities or investments for the transportation, delivery, storage, and handling of fuel.
(6) "Combined application" means a base load review application which is combined with an application for a certificate under the Utility Facility Siting and Environmental Protection Act, or which involves a plant located outside of the State of South Carolina, and at the utility's option may be combined with an application for new electric rates under Section 58-27-860.
(7) "Combined proceeding" means a proceeding to consider all aspects of a combined application.
(8) "Construction work in progress" means capital costs as defined above associated with a base load plant which have been incurred but have not been included in the utility's plant-in-service.
(9) "General rate proceeding" means a proceeding under Section 58-27-810 and other applicable provisions for the establishment of new electric rates and charges, and where orders in general rate proceedings are referenced in this article, these orders include rate orders issued in proceedings or combined proceedings under this article.
(10) "In-service expenses" means reasonably projected expenses recognized under generally accepted principles of regulatory and financial accounting as a result of a plant commencing commercial operation, including:
(a) expenses associated with operating and maintaining a plant, as well as taxes and governmental charges applicable to the plant including taxes other than income taxes;
(b) depreciation and amortization expenses related to the plant;
(c) revenue requirements related to the utility's cost of capital applied to the investment in supplies, inventories, and working capital associated with the plant; and
(d) other costs determined by the commission to be appropriate for ratemaking purposes. In-service expenses include, but are not limited to, labor, supplies, insurance, general and administrative expenses, and the cost of outside services, but do not include costs recovered as fuel costs pursuant to Section 58-27-865.
(11) "Person" means any individual, group, firm, partnership, or corporation.
(12) "Preconstruction costs" means all costs associated with a potential nuclear plant incurred before issuance of a final certificate under the Utility Facility Siting and Environmental Protection Act, including, without limitation, the costs of evaluation, design, engineering, environmental and geotechnical analysis and permitting, contracting, other required permitting including early site permitting and combined operating license permitting, and initial site preparation costs and related consulting and professional costs, and shall include AFUDC associated with those costs. For potential nuclear plants located in other states, the costs must be those incurred before issuance of a certificate by the host state under statutes comparable to the Utility Facility Siting and Environmental Protection Act.
(13) "Proceeding" means the proceeding to consider an application filed under this chapter.
(14) "Project development application" means an application for a project development order.
(15) "Project development order" means an order establishing the prudence of a utility's decision to incur preconstruction costs associated with a nuclear plant or potential nuclear plant.
(16) "Return on equity" means the return on common equity established in the base load review order for a plant. But, if the order in the utility's most recent general rate proceeding was issued no more than five years before the date of filing of the application or combined application, or if such an order is issued after the application, combined application or base load review order related to the plant is filed, then at the utility's option, the rate of return on common equity established in that order shall be the rate of return used for computing future rate revisions under this article. A project-specific return on equity set hereunder shall apply exclusively to the establishment of the weighted average cost of capital under this article and shall not be used for reporting or any other purpose.
(17) "Revised rates" means a revised schedule of electric rates and charges reflecting a change to the utility's then current nonfuel rates and charges to add incremental revenue requirements related to a base load plant as authorized in this article. For a nuclear plant under construction, until it enters commercial operation the rate adjustments related to the plant shall include recovery of the weighted average cost of capital applied to the outstanding balance of capital costs of that plant only and shall not include depreciation or other items constituting a return of capital to the utility. For a coal plant, no revised rates shall be allowed except that an adjustment under Section 58-33-280(J)(1) shall be permitted to take effect on or after the date commercial operations of the plant commence.
(18) "Revised rates order" means an order issued by the commission approving, modifying, or denying the utility's request to charge revised rates under this article, which revised rates order an aggrieved party may contest in an adversarial hearing before the commission.
(19) "Revised rates proceedings" means all proceedings to consider an application for revised rates or review of a revised rates order.
(20) "Utility" means a person owning or operating equipment or facilities for generating, transmitting, or delivering electricity to South Carolina retail customers for compensation but it shall not include electric cooperatives, municipalities, the South Carolina Public Service Authority, or a person furnishing electricity only to himself, itself, its residents, employees, or tenants when the electricity is not resold or used by others.
(21) "Utility Facility Siting and Environmental Protection Act" means Section 58-33-10 and other applicable provisions of this chapter.
(22) "Weighted average cost of capital" or "cost of capital" means the utility's average cost of debt and equity capital:
(a) incorporating the return on equity;
(b) incorporating the utility's current weighted average cost of debt;
(c) weighting (a) and (b) according to the utility's capital structure for ratemaking purposes, as established in the order in the utility's last general rate proceeding, updated to reflect the utility's current levels of debt and equity capital; and
(d) adjusting the result for the effect of income taxes.
(23) "Imprudent" or "imprudence" includes, but is not limited to, lack of caution, care, or diligence as determined by the commission in regard to any action or decision taken by the utility or one acting on its behalf including, but not limited to, its officers, board, agents, employees, contractors, subcontractors, consultants affecting the project, or any other person acting on behalf of or for the utility affecting the project. Imprudent or imprudence includes, but does not require, a finding of negligence, carelessness, or recklessness.
Imprudence on behalf of any contractor, subcontractor, agent, or person hired to construct a plant or perform any action or service on behalf of the utility shall be attributed to the utility.
(24) "Prudent", "prudence", or "prudency" means a high standard of caution, care, and diligence in regard to any action or decision taken by the utility or one acting on its behalf including, but not limited to, its officers, board, agents, employees, contractors, subcontractors, consultants affecting the project, or any other person acting on behalf of or for the utility affecting the project.
To the extent a utility enters a contract with a third party that delegates some or all decision-making authority related to the project, the utility retains the burden of establishing the prudency of specific items of cost or specific third-party decisions.
"Prudent", "prudence", or "prudency" also requires that any action or decision be made in a timely manner.
In determining whether any action or decision was prudent, the commission shall consider, including, but not limited to:
(a) whether the utility acts in a timely manner, with any passage of time which results in increased costs or expense prior to the utility acting or making the decision weighing against a finding of prudency;
(b) whether prior actions or decisions by the utility were imprudent and such imprudent actions led to a decision by the utility that could otherwise be prudent. Such circumstances weigh against a finding of prudency; and
(c) any other relevant factors, including commission of a fraudulent act, which are deemed not to be prudent.
As used in item (c), "fraud" includes, in addition to its normal legal connotation, concealment, omission, misrepresentation, or nondisclosure of a material fact in any proceeding or filing before the commission or Office of Regulatory Staff. Proceedings and filings to which the provisions of this paragraph apply include, but are not limited to, rate or revised rate filings, responsive filings, motions, pleadings, briefs, memoranda, document requests, and other communications before the commission or Office of Regulatory Staff.
HISTORY: 2007 Act No. 16, Section 2, eff upon approval (became law without the Governor's signature on May 3, 2007); 2018 Act No. 258 (H.4375), Section 1, eff June 28, 2018.
Editor's Note
2018 Act No. 258, Section 12, provides as follows:
"SECTION 12. This act takes effect upon approval by the Governor and applies to all cases, proceedings, petitions, or matters pending before the Public Service Commission or in any other court or venue on or after the effective date of this act."
Effect of Amendment
2018 Act No. 258, Section 1, added (23), relating to the definition of "imprudent", and added (24), relating to the definition of "prudent".