Friends Of The Earth

• Decision Date: 26 April 2010
• Docket Number: No. 26811.,26811.
• Citation: 387 S.C. 360,692 S.E.2d 910
• Court: South Carolina Supreme Court
• Parties: FRIENDS OF the EARTH, Appellant,v.The PUBLIC SERVICE COMMISSION OF SOUTH CAROLINA, South Carolina Electric & Gas, and Office of Regulatory Staff,of whom South Carolina Electric & Gas, and Office of Regulatory Staff are Respondents.In re Combined Application of South Carolina Electric & Gas Company for a Certificate of Environmental Compatibility and Public Convenience and Necessity and for a Base Load Review Order for the Construction and Operation of a Nuclear Facility in Jenkinsville, South Carolina.

387 S.C. 360

692 S.E.2d 910

FRIENDS OF the EARTH, Appellant,v. The PUBLIC SERVICE COMMISSION OF SOUTH CAROLINA, South Carolina Electric & Gas, and Office of Regulatory Staff,of whom South Carolina Electric & Gas, and Office of Regulatory Staff are Respondents.In re Combined Application of South Carolina Electric & Gas Company for a Certificate of Environmental Compatibility and Public Convenience and Necessity and for a Base Load Review Order for the Construction and Operation of a Nuclear Facility in Jenkinsville, South Carolina.

No. 26811.

Supreme Court of South Carolina.

Heard March 4, 2010.

Decided April 26, 2010.

Robert Guild, of Columbia, for Appellant.

Belton T. Zeigler and Lee E. Dixon, both of Pope Zeigler, LLC, Florence P. Belser, Nanette S. Edwards and Shannon Bowyer Hudson, all of Office of Regulatory Staff, James B. Richardson, Jr., Mitchell Willoughby and Tracey Green, both of Willoughby & Hoefer, all of Columbia, and K. Chad Burgess, and Catherine D. Taylor, both of SC Electric & Gas Co., of Cayce, for Respondents.

Justice HEARN.

Friends of the Earth (Appellant) appeals from the order of approval issued by the Public Service Commission (Commission) of the combined application of South Carolina Electric & Gas Company (SCE & G) to construct and operate an additional two-unit nuclear facility, as well as to revise its rates to reflect the cost of capital applied to the project. We affirm.

FACTUAL/PROCEDURAL BACKGROUND

In May of 2008, SCE & G filed a combined application for certificate of environmental compatibility, public convenience and necessity (Application) pursuant to the Utility Facility Siting and Environmental Protection Act (Siting Act),¹ and the Base Load Review Act,² with the Commission. The purpose of the Application was to seek the approval of the Commission to construct and operate a new two-unit nuclear generating facility (Facility) in Jenkinsville, South Carolina. The project is to be jointly owned by SCE & G and the South Carolina Public Service Authority (Santee Cooper). The application was put together following an evaluation of the growing demand for electricity and a comparison of the available electricity generation technologies, which arrived at the conclusion that nuclear generation was the least costly alternative available. As a part of the Application under the Base Load Review Act, SCE & G also applied for: (1) a pre-construction review of the prudency of its decision to construct the Facility; (2) approval of cost and milestone targets for completing the Facility; and (3) an initial rate adjustment of one-half of one percent to reflect the cost of constructing and carrying the Facility.

Appellant is a not-for-profit membership organization that advocates clean energy usage initiatives, based on efficiency improvements, along with renewable energy sources such as wind, geothermal, and solar power. Appellant claims membership consisting of ratepayers of SCE & G and residents of South Carolina, including neighbors of the site of the proposed Facility, who allege they have direct and material interests in access to economical, clean, and sustainable electric service, as well as an interest in protecting the use and enjoyment of the natural resources of the State. Appellant opposed the Application of SCE & G, and timely filed a petition to intervene in the proceeding before the Commission, which was allowed.³ Additionally, The Office of Regulatory Staff (ORS) was a party to the Application ⁴ pursuant to section 58-4-10(B) of the South Carolina Code (Supp.2009), and is a respondent in this matter on appeal.

The Commission held a hearing on the Application, and by Order No. 2009-104(A) approved the Application of SCE & G, authorizing the construction and operation of the Facility. Petitions for Rehearing or Reconsideration were filed on behalf of Appellant, the South Carolina Energy User Committee, and Joseph Wojcicki, which were denied by the Commission by Order No. 2009-218. Thereafter, Appellant appealed the denial to this Court.

LAW/ANALYSIS

I. Standard of Review applied under the Base Load Review Act

Initially, Appellant contends this Court should apply a new standard of review to the analysis of the Commission below, because this is the first combined application the Commission has decided under the Base Load Review Act. ⁵ Appellant maintains a new standard of “heightened scrutiny” is the appropriate standard this Court should apply to decisions of the Commission under the Base Load Review Act. We disagree.

Ordinarily, the Court's application of varying degrees of scrutiny is limited to those cases where a statute's constitutionality is being challenged under the Equal Protection Clause of the Constitution. See U.S. Const. amend. XIV, § 1; S.C. Const. art. I, § 3. The application of heightened, or strict scrutiny is warranted in cases where “a classification trammels fundamental personal rights or is drawn upon inherently suspect distinctions such as race, religion, or alienage....” Fraternal Order of Police v. S.C. Dep't of Revenue, 352 S.C. 420, 431, 574 S.E.2d 717, 722 (2002) (quoting City of New Orleans v. Dukes, 427 U.S. 297, 303, 96 S.Ct. 2513, 49 L.Ed.2d 511 (1976)). Appellant cites no authority for the proposition that application of this level of scrutiny is necessary to review the utility regulation decisions of the Commission, and moreover fails to identify a fundamental right that has been abridged. At the core of Appellant's argument is its assertion that the Base Load Review Act so fundamentally changes the landscape of Commission review of a company's proposal, a heightened level of scrutiny is necessary on the front end of the review process. We find Appellant's claim unsubstantiated and against the plain reading of the Base Load Review Act. Section 58-33-240(A) of the South Carolina Code (Supp.2009) specifically provides that “[e]xcept as otherwise specified in this article, all procedural requirements that apply to general rate proceedings by law or regulation shall apply to proceedings and combined proceedings, to revised rates proceedings and to the judicial review of orders issued under this article.” (emphasis added). As a result, we find no basis for the application of a heightened level of scrutiny to appeals under the Act.

Consequently, “[t]his Court employs a deferential standard of review when reviewing a decision of the Public Service Commission and will affirm that decision when substantial evidence supports it.” Duke Power Co. v. Public Service Comm'n of South Carolina, 343 S.C. 554, 558, 541 S.E.2d 250, 252 (2001) (citing Porter v. South Carolina Public Service Comm'n, 333 S.C. 12, 507 S.E.2d 328 (1998)). In applying a substantial evidence test, an appellate court may not substitute its judgment for the judgment of the agency as to the weight of the evidence on questions of fact, unless its findings or conclusions are clearly erroneous in view of the reliable, probative and substantial evidence on the whole record. Lark v. Bi-Lo, Inc., 276 S.C. 130, 276 S.E.2d 304 (1981); S.C.Code Ann. § 1-23-380 (Supp.2009). Substantial evidence is not a mere scintilla; rather, it is evidence which, considering the record as a whole, would allow reasonable minds to reach the same conclusion as the agency. Lark at 135-36, 276 S.E.2d at 306-07.

Furthermore, the Court may not substitute its judgment for the Commission's on questions about which there is room for a difference of intelligent opinion. Duke Power Co., 343 S.C. at 558, 541 S.E.2d at 252. Because the Commission's findings are presumptively correct, the party challenging a Commission order bears the burden of convincingly proving the decision is clearly erroneous, or arbitrary or capricious, or an abuse of discretion, in view of the substantial evidence on the whole record. Id.

II. Alleged Failings of the SCE & G Application

Appellant next contends SCE & G failed to update its integrated resource plan (IRP) or complete a review of potential energy efficiency and demand side management (DSM) load reductions, thus SCE & G has failed to adequately demonstrate the need for the proposed capacity expansion of the Facility. We disagree.

The Commission's order references SCE & G's then-forthcoming DSM reports, as well as the company's requirement under section 58-37-20 of the South Carolina Code (Supp.2009) to file an IRP. Based on the evidence and testimony included in SCE & G's combined application, both in favor and against, the Commission determined SCE & G had adequately accounted for and addressed these concerns in its forecasts. The consensus reached by the Commission was that SCE & G had demonstrated a need to build the Facility, irrespective of the concerns.

DSM programs are designed to reduce the overall energy consumption of customers. There are two general types of DSM programs: first, demand reduction programs that involve motivating customers to shift their use of power away from peak energy usage periods, thus limiting or reducing the growth of energy consumption during a utility's peak demand; and second, energy efficient programs which seek to reduce customers' overall energy consumption through customer information and energy conservation programs designed to educate the energy-consuming public. With respect to SCE & G's DSM reports, the Commission noted that SCE & G, at the time of the order, was exploring the revitalization of its programs in light of the current energy prices, general economic conditions, and the increased environmental concerns of its customers. In addition, the Commission acknowledged that SCE & G could have made a better effort at establishing its energy efficiency programs in the past, and stated its anticipation at reviewing the company's new DSM programs in June of 2009. Nonetheless, viewing the entirety of the evidence before it, the Commission determined that DSM programs were not a viable substitute for the base load capacity for which SCE & G had...