Class action lawsuit claims Santee Cooper raised rates for unused Pee Dee power plant

Class action lawsuit claims Santee Cooper raised rates for unused Pee Dee power plant

CONWAY, SC (WMBF) – A Conway lawyer has filed paperwork for a class action lawsuit against Santee Cooper and the South Carolina Public Service Authority, alleging the utility raised the rates on over 160,000 retail customers and spent over $362 million on a coal power plant from a Chinese "kit" in the Pee Dee area that remains unused.

The lawsuit, filed by Conway attorney George Hearn on behalf of "himself and all other similarly situated," includes a class of customers who paid increased rates from November 2009 to present, totaling more than 163,000 customers across Berkeley, Georgetown and Horry counties.

The lawsuit comes after Santee Cooper abandoned the VC Summer nuclear power plant in Fairfield County after raising the rates on customers for years to pay for it. SC Gov. Henry McMaster said all options are on the table to sell the plant to restart construction on the project.

The suit alleges that Santee Cooper's Board of Directors approved the permitting for two coal power plant units in May 2006 at the utility's Pee Dee Energy Campus. In 2007, Santee Cooper issued bonds for about $342 million to finance the construction of the Pee Dee plant. It then used the proceeds to pay about $249 million for a disassembled coal plant "kit" from China to be delivered to the Florence County site.

The lawsuit claims that Santee Cooper purchased the power plant kit before it could possibly obtain all the necessary permits to construct and operate the plant.

Santee Cooper issued additional bonds in 2008 and 2009 to finance construction of the Chinese power plant, totaling $406 million in 2008 and $164 million in 2009, the suit states.

Then, according to the lawsuit, in August 2009, the Board of Director made the decision to "suspend efforts to permit" the proposed power plant.

While the board did not approve a 2009 proposal to increase overall customer bills by 4.4 percent and an additional 5.5 percent, the residential rate was increased from 6.32 cents per kilowatt hour (KWH) to 8.88 cents per KWH, with an additional 1 cent per KWH increase during the summer months, the lawsuit alleges.

"This rate increase against residential and other rate payers was not authorized by Santee Cooper, nor by statute, and was very much in excess of the increase being considered," the lawsuit states.

Then in April of 2010, the board cancelled plans to construct the Pee Dee plant, and reclassified the prepaid expenses, which "artificially inflated the financial condition of Santee Cooper," the lawsuit alleges.

In September 2012, Santee Cooper announced the board approved a two-year rate hike totaling a 7 percent increase, but then, the lawsuit alleges, began charging rates at about 10 percent higher. This rate hike was not presented or discussed at public hearings, as required by law, the suit claims.

To date, the Chinese Power Plant kit sits unassembled and unused at the Pee Dee property in Kingsburg, Florence County, the suit states. Santee Cooper continues to spend about $13 million per year for maintenance and security, and about $3.5 million annual to keep the equipment in working condition.

The suit claims Santee Cooper approved financing of the plant without ensuring the necessary permits would be issued and continues to pass the costs of the plant on to customers, "causing continued damage to the rate payers," and charging customers illegal electricity rates.

The paperwork filed seeks to certify the matter as a class action, grant judgment in favor of the class for their damages, attorney's fees, and other remedy to which they may be entitled, grant any further relief that the court deems proper.

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