Duke Energy Carolinas v. SC Office of Regulatory Staff

THE STATE OF SOUTH CAROLINA
In The Supreme Court

Duke Energy Carolinas, LLC, Appellant-Respondent,

v.

South Carolina Office of Regulatory Staff, Hasala
Dharmawardena, CMC Recycling, Cypress Creek
Renewables, LLC, South Carolina Department of
Consumer Affairs, Sierra Club, South Carolina Coastal
Conservation League, South Carolina Energy Users
Committee, South Carolina Solar Business Alliance, Inc.,
South Carolina State Conference of the National
Association for the Advancement of Colored People,
Upstate Forever, Vote Solar, and Walmart, Inc.,
Respondents,

of whom South Carolina Energy Users Committee is
Respondent-Appellant.

Appellate Case No. 2019-001900

and

Duke Energy Progress, LLC, Appellant,

v.

South Carolina Office of Regulatory Staff, Nucor Steel-
South Carolina, Cypress Creek Renewables, LLC, South
Carolina Department of Consumer Affairs, Sierra Club,
South Carolina Coastal Conversation League, South
Carolina Energy Users Committee, South Carolina Solar
Business Alliance, Inc., South Carolina State Conference
of the National Association for the Advancement of
Colored People, Upstate Forever, Vote Solar, and
Walmart, Inc., Respondents.
Appellate Case No. 2019-001904

Appeal from the Public Service Commission

Opinion No. 28066
Heard May 26, 2021 – Filed October 27, 2021

AFFIRMED

Robert E. Stepp and Frank R. Ellerbe III, both of
Robinson Gray Stepp & Laffitte, LLC, of Columbia;
Sarah P. Spruill, of Haynsworth Sinkler Boyd, P.A., and
Heather Shirley Smith, both of Greenville; and Thomas
S. Mullikin, of Mullikin Law Firm, of Camden, all for
Appellants-Respondents Duke Energy Carolinas, LLC
and Duke Energy Progress, LLC.

Jeffrey M. Nelson, Jenny Rebecca Pittman, C. Lessie
Hammonds, Andrew M. Bateman, Alexander W.
Knowles, Christopher Michael Huber, and Steven W.
Hamm, all of Columbia, and Wallace K. Lightsey, of
Wyche Law Firm, of Greenville, all for Respondent
South Carolina Office of Regulatory Staff; Scott Elliott,
of Elliott & Elliott, P.A., of Columbia, for Respondent-
Appellant South Carolina Energy Users Committee;
Carolyn Grube Lybarker, of Columbia, and Laura
Rebecca Dover, of York, both for Respondent South
Carolina Department of Consumer Affairs; Alexander
George Shissias, of The Shissias Law Firm, LLC, of
Columbia, for Respondent CMC Recycling; Richard L.
Whitt, of Whitt Law Firm, LLC, of Irmo, Stephanie
Underwood Eaton and Carrie H. Grundmann, both of
Spilman Thomas & Battle, PLLC, of Winston-Salem,
North Carolina, and Derick P. Williamson, of
Mechanicsburg, Pennsylvania, all for Respondents
 Cypress Creek Renewables, LLC, South Carolina Solar
Business Alliance, Inc., and Walmart, Inc.; Bess Jones
DuRant, of Sowell & DuRant, LLC, of Columbia, and
Thadeus B. Culley, of Chapel Hill, North Carolina, both
for Respondent Vote Solar; Robert Guild, of Robert
Guild, Attorney at Law, of Columbia, and Bridget M.
Lee, of Washington, D.C., both for Respondent Sierra
Club; and Katherine Lee Mixson, of Southern
Environmental Law Center, of Charleston, and Gudrun
E. Thompson and David L. Neal, both of Chapel Hill,
North Carolina, all for Respondents South Carolina
Coastal Conservation League, Upstate Forever, and
South Carolina State Conference of the National
Association for the Advancement of Colored People.

Wm. Grayson Lambert and Bradley S. Wright, both of
Burr & Forman, LLP, of Columbia, for Amicus Curiae
South Carolina Farm Bureau Federation.

ACTING CHIEF JUSTICE KITTREDGE: This case involves two
consolidated cross-appeals from the Public Service Commission's (PSC)
determinations regarding the most recent ratemaking applications filed by Duke
Energy Carolinas, LLC (DEC) and Duke Energy Progress, LLC (DEP)
(collectively, Duke or the two Duke entities).1 Each Duke entity owns one coal-
fired power plant in South Carolina and seven coal-fired power plants in North
Carolina, for a total of sixteen affected plants. In their ratemaking applications, the
two Duke entities sought recovery for expenses related to their plants in both
states, with those costs shared proportionately between their North and South
Carolina customers. The PSC, in two lengthy and thoughtful orders, allowed in
part and disallowed in part the requested expenses. On appeal, Duke now contends
the PSC erred in disallowing (1) environmental compliance costs associated with
North Carolina law; (2) litigation costs incurred by Duke in defending itself from
various lawsuits; and (3) carrying costs on specified deferred accounts. In the
cross-appeal, the South Carolina Energy Users Committee (SCEUC) contends the
PSC erred in allowing DEC recovery of costs associated with a now-abandoned

1
DEC and DEP are two of nine wholly-owned subsidiaries of Duke Energy
Corporation, one of the largest power-generating companies in the country.
nuclear project in Cherokee County (the Lee Nuclear Project) because of the South
Carolina General Assembly's recent repeal of the Base Load Review Act (BLRA).

We affirm the PSC's decisions in full because its decisions are supported by
substantial evidence in the record, are not arbitrary or capricious, and are not
controlled by an error of law. The PSC's orders in these two cases are exemplary
in that they clearly set forth in detail the arguments and evidence presented by both
sides, and then equally clearly articulate reasons for selecting one side's arguments
or evidence over the other. Many of the issues on appeal involve judgment calls
based on factual determinations, and given our deferential standard of review, we
cannot say the PSC's decisions are unsupported or irrational. Moreover, after
careful review, we respectfully reject Duke's effort to recast the PSC's factual
findings as legal errors. We therefore affirm the PSC's comprehensive orders.

I.

a. History of CCR Treatment and Regulation

Beginning in the 1920s, much of Duke's power generation came from coal-fired
power plants, each of which produced coal combustion residuals (CCRs or,
colloquially, coal ash) as a byproduct of energy production.2 Until the 1950s, and
in accordance with industry standards and environmental laws (or, more
accurately, the lack thereof) at the time, CCRs were manually collected and
transported to storage or dumping sites, most of which were unlined landfills.3
However, in the 1950s, the electric utility industry began to utilize a water sluice

2
CCRs include fly ash (fine ash powder released into the air), bottom ash (the
coarser ash left behind in the furnace after coal is burned), boiler slag (melted
bottom ash), and flue gas desulfurization materials (a mixture of noxious gases
produced during combustion). See 40 C.F.R. § 257.53 (2021). "These residuals
vary in their size and texture, but all contain contaminants of environmental
concern." Util. Solid Waste Activities Grp. v. Env't Prot. Agency, 901 F.3d 414,
421 (D.C. Cir. 2018) (per curiam) (internal alternation and quotation marks
omitted) (citation omitted).
3
An unlined landfill is a depression in the ground with nothing preventing the
potential contamination of the surrounding dirt or groundwater from the material
placed in the landfill; whereas a lined landfill is a depression in the ground that has
some sort of impermeable material along the bottom and sides that prevents
seepage.
process that automatically transported CCRs to ash storage basins, also known as
coal ash ponds.4 This process was known as wet ash handling and, obviously,
created a significant amount of polluted wastewater. The wet ash handling process
was unregulated until the Clean Water Act was passed in the 1970s. From then
until 2015, a coal-fired power plant was required to obtain a Clean Water Act
permit issued pursuant to the National Pollutant Discharge Elimination System
(NPDES). A violation of the NPDES permit constituted a violation of the Clean
Water Act. Thus, so long as the plant complied with its NPDES permit, wet ash
handling was considered the standard, legal way to dispose of CCRs.

Nonetheless, it was known from at least the late 1970s that CCR wastewater
presented a serious potential source of surface and groundwater contamination, and
that the wastewater could cause extensive environmental damage if not properly
handled. Likewise, the risks CCRs posed to human health were well documented.
As a result, beginning around the late 1970s, the practice of using unlined coal ash
ponds to dispose of CCRs and the associated wastewater became the subject of
sporadic criticism and concern, albeit not federal lawmaking.

b. The Beginnings of Modern CCR Regulation

In December 2008, there was a catastrophic coal ash spill in Tennessee that
released 5.4 million cubic yards of coal ash and wastewater into a nearby river,
affecting about three hundred acres of land surrounding the coal ash pond. As a
result, in June 2010, the United States Environmental Protection Agency (EPA)
proposed new additional regulations under the Resource Conservation and
Recovery Act to directly address the risks associated with the disposal of CCRs,
rather than only incidentally regulating CCR disposal under the Clean Water and
Clean Air Acts. Pursuant to the federal Administrative Procedures Act, the
proposed regulations were the subject of extensive study, examination, and
comments from a variety of special interest groups ranging from environmental
organizations to the electric utility industry.

Meanwhile, in North Carolina in 2011 and 2012, several Duke employees,
including engineers and a station manager, recommended inspecting via video
camera specific pipes leading to the Dan River plant's coal ash pond, at a cost of
approximately $20,000. These Duke employees were concerned that the pipes
may have deteriorated over time. Duke management denied the modest funding

4
Consistent with the landfills that were used previously, these coal ash ponds were
also generally unlined.
requests. Less than two years later, in February 2014, a sixty-year-old pipe at the
Dan River facility failed, resulting in the unpermitted discharge of approximately
27 million gallons of coal ash wastewater and 39,000 tons of coal ash, which
flowed more than 62 miles down the Dan River in North Carolina and Virginia.
Apparently, the pipe had never been examined since its installation in the 1950s,
and a subsequent inspection revealed extensive corrosion that would have been
visible had the video survey been performed as requested.

Duke subsequently entered pleas for criminal negligence related to its handling of
the Dan River spill, including admitting its negligence in operating and
maintaining the coal ash pond for years prior to the spill. Likewise, Duke pled
guilty to criminal negligence and state environmental violations related to
additional, unpermitted coal ash leaks at several of its other plants that resulted in
further environmental damage in North Carolina.

c. The Resulting North Carolina Statutory Scheme: CAMA

Acting quickly after the Dan River spill, the North Carolina General Assembly
took only two months to draft an initial, comprehensive statutory scheme intended
to address CCR storage and cleanup in the state, titling the new legislation the Coal
Ash Management Act of 2014 (CAMA).5 See generally N.C. Gen. Stat. §§ 130A-
309.200 to .231 (2021). In the preface of CAMA, the North Carolina General
Assembly specifically stated its actions were taken in response to the Dan River
spill. Likewise, the North Carolina General Assembly stated the intent of CAMA
was to protect the health and safety of the public. After slight revisions, CAMA
was formally enacted in August 2014, approximately six months after the Dan
River spill.

In broad strokes, CAMA imposed a number of strict requirements on the continued
operation of coal-fired power plants in North Carolina. For example, CAMA
prohibited the continued use of wet ash handling, instead requiring coal-fired
plants to dispose of their CCRs without the use of, or storing them in, water.
Likewise, CAMA mandated the closure of all existing coal ash ponds in the state.
To that end, the North Carolina Department of Environmental Quality was charged
with assigning a risk classification to all coal-fired plants in the state depending on

5
Prior to the Dan River spill, the North Carolina General Assembly was not
considering legislation to address coal ash storage or cleanup. In fact, the initial
CAMA preface stated that "the issue of coal ash storage ha[d] not been adequately
addressed in North Carolina for more than six decades."
the level of danger they posed to the surrounding environment and communities,
with possible classifications of high-, intermediate-, or low-risk. The risk
classifications corresponded to the speed and method required to close a plant's
coal ash ponds, with higher-risk plants being required to close their ponds more
quickly and in a more restrictive fashion than lower-risk plants.6

d. The Federal CCR Rule

Almost a year after CAMA was enacted, the EPA finalized its proposed
regulations, setting uniform federal guidelines for the disposal of CCRs under the
Resource Conservation and Recovery Act. See generally 40 C.F.R. §§ 257.1–.107,
261.1–.1090 (2021). These new regulations, colloquially referred to as the CCR
Rule, set a national "floor" for the safe disposal of CCRs, but encouraged states to
set higher standards if they deemed it appropriate. See Hazardous and Solid Waste
Management System; Disposal of Coal Combustion Residuals from Electric
Utilities, 80 Fed. Reg. 21301, 21430 (Apr. 17, 2015) (codified at 40 C.F.R. pts.
257, 261) ("[The] EPA recognizes that some states have already adopted
requirements that go beyond the minimum federal requirements . . . . This rule will
not affect these state requirements. The federal criteria promulgated today are
minimum requirements and do not preclude [s]tates[] from adopting more
stringent requirements where they deem to be appropriate." (emphasis added)).
Generally speaking, the CCR Rule was less restrictive than CAMA. For example,
unlike CAMA, the CCR Rule did not explicitly prohibit wet ash handling, did not
require all coal ash ponds to close, imposed longer deadlines for the closures that
were required, and allowed less stringent closure methods. The CCR Rule also did
not apply to inactive coal ash ponds (i.e., ponds that were not receiving new coal
ash wastewater) at retired plants, and therefore, absent state law to the contrary,
those ponds could remain open indefinitely, even if they were unlined.7

6
For example, high-risk plants were required to close their coal ash ponds ten
years sooner than low-risk plants. Likewise, high-risk plants were required to
move the dewatered ash to a lined landfill so as to prevent contamination of the
surrounding soil and groundwater, whereas low-risk plants were permitted to "cap
in place," i.e., leave the remaining dewatered ash in place in an unlined landfill and
merely cover it with a layer of dirt and topsoil.
7
Although the CCR Rule does not currently apply to inactive coal ash ponds at
retired plants, the United States Court of Appeals for the District of Columbia
Circuit found that exemption was arbitrary and capricious and remanded to the
EPA for further rulemaking. See Util. Solid Waste Activities Grp., 901 F.3d at
 e. DHEC Consent Agreements

As North Carolina state law, CAMA only applies in North Carolina and, therefore,
does not apply to the coal ash ponds at Duke's two coal-fired plants in South
Carolina. Nonetheless, following the passage of CAMA, Duke voluntarily
approached DHEC and entered into consent agreements in which it agreed to
excavate the coal ash ponds at both plants and place the ash in lined landfills.8 In
exchange, DHEC agreed not to sue Duke for any future problems related to the
coal ash ponds at Duke's two South Carolina plants.

f. Duke's 2017 North Carolina Ratemaking Application

In May and July 2017, DEC and DEP, respectively, filed applications for
ratemaking with the North Carolina Utilities Commission. Ultimately, the Utilities
Commission awarded Duke the full amount of the coal ash remediation expenses
Duke believed should be added to its utility rates in North Carolina, minus a $100
million "mismanagement penalty," which was to be amortized over five years. The
Utilities Commission did not specifically explain how it arrived at the $100 million
penalty, instead generally stating that the penalty was "based on the totality of
evidence contained in the record" and was somehow related to Duke's rate of
return that "would have been allowed if there were sound management." Likewise,
the Utilities Commission broadly stated Duke's "mismanagement t[ook] the form
of admitted inadequate oversight of its CCR activities that placed service to
consumers at risk and, at least indirectly, increased costs," referring to the guilty
pleas stemming from the Dan River spill. Additionally, the Utilities Commission

432–34, 449. The parties here suggest the EPA is likely to amend the CCR Rule to
apply to inactive coal ash ponds at inactive plants. However, the EPA has not
issued a final rule yet, and there is no way to tell what shape the final rule will
take. Duke owns two retired plants in North Carolina with inactive coal ash ponds
that are required to close under CAMA, when the ponds would not otherwise be
impacted by the current CCR Rule.
8
DEC entered into the agreement for its South Carolina plant in September 2014
(after the passage of CAMA only), and DEP entered the agreement for its South
Carolina plant in July 2015 (after the passage of both CAMA and the CCR Rule).
authorized Duke full recovery of its litigation expenses, as well as the ability to
receive carrying costs on deferred accounts, including coal ash remediation
expenses.9

Subsequently, the Supreme Court of North Carolina affirmed the Utilities
Commission's order in almost its entirety, with the exception of a single issue not
presented in this appeal. See State ex rel. Utils. Comm'n v. Stein, 851 S.E.2d 237
(N.C. 2020). In general, the state supreme court's decision was derived largely
from the standard of review, specifically, that there was substantial evidence in the
record to support the Utilities Commission's decision. See id. at 257–58, 273.

g. Duke's 2018 South Carolina Ratemaking Application

In November 2018, DEC and DEP filed separate applications for ratemaking with
the PSC. In both applications, Duke requested the ability to increase its rates so as
to compensate it for (1) expenditures related to coal ash remediation in North and
South Carolina (including both CAMA-compliance costs and costs associated with
the DHEC consent agreements); (2) litigation expenses related to defending itself
in various coal ash lawsuits; (3) carrying costs on certain deferred accounting
expenses; and (4) construction costs actually incurred in pursuing the Lee Nuclear
Project.10

As to the coal ash remediation expenses, the PSC granted Duke slightly less than
50% of the amount requested. The amount allowed corresponded to the costs
associated with complying with the CCR Rule and the DHEC consent agreements;
the amount disallowed corresponded to costs that were solely attributable to
CAMA. As to the litigation expenses, the PSC denied recovery entirely, finding
Duke failed to provide sufficient evidence to substantiate its claimed legal fees. As
to the carrying costs, the PSC ruled Duke could recover any money spent on

9
The dissenting opinion finds the North Carolina proceedings significant and
persuasive, which should be unsurprising given that the Utilities Commission
generally allowed CAMA related expenses (minus the $100 million
mismanagement penalty) in the North Carolina proceedings. CAMA, of course,
had (and continues to provide) a direct benefit to North Carolina.
10
SCEUC refers to these costs as "preconstruction" costs. However, because Duke
actually incurred the amounts requested, the expenses were not mere estimates of
the cost of future construction, i.e., were not true "preconstruction" costs. As a
result, we will refer to them simply as construction costs.
operations and maintenance costs, but could not receive a profit for having delayed
recovery of those expenses by placing them into deferral accounts. Finally, as to
the recovery of costs associated with the Lee Nuclear Project, the PSC allowed the
expenses, finding they were prudently incurred, and that the General Assembly's
repeal of the BLRA did not foreclose Duke from recovering its actual expenses in
a general ratemaking proceeding.

Duke and SCEUC filed petitions for rehearing, but the PSC affirmed its original
orders in full. The Duke entities and SCEUC then directly appealed to this Court.
See Rule 203(d)(2)(A), SCACR (requiring appeals from the PSC to be filed with
the Clerk of this Court). We consolidated the cases prior to oral argument.

II.

This Court has long followed the governing principles set forth by the Supreme
Court of the United States in its two seminal utility regulation cases: Bluefield
Water Works & Improvement Co. v. Public Service Commission,11 and Federal
Power Commission v. Hope Natural Gas Co.12 In Bluefield, the Supreme Court
explained:

A public utility is entitled to such rates as will permit it to earn a
return on the value of the property which it employs for the
convenience of the public equal to that generally being made at the
same time and in the same general part of the country on investments
in other business undertakings which are attended by corresponding,
risks and uncertainties; but it has no constitutional right to profits such
as are realized or anticipated in highly profitable enterprises or
speculative ventures. The return should be reasonably sufficient to
assure confidence in the financial soundness of the utility and should
be adequate, under efficient and economical management, to maintain
and support its credit and enable it to raise the money necessary for
the proper discharge of its public duties.

262 U.S. at 692–93. Likewise, in Hope Natural Gas Co., the Supreme Court stated
that a public utilities commission is

11
262 U.S. 679 (1923).
12
320 U.S. 591 (1944).
 not bound to the use of any single formula or combination of formulae
in determining rates. Its rate-making function, moreover, involves the
making of "pragmatic adjustments." . . . Under the statutory standard
of "just and reasonable" [rates,] it is the result reached[,] not the
method employed[,] which is controlling. It is not theory but the
impact of the rate order which counts. If the total effect of the rate
order cannot be said to be unjust and unreasonable, judicial inquiry . .
. is at an end. The fact that the method employed to reach that result
may contain infirmities is not then important.

320 U.S. at 602 (internal citations omitted).

In general, "the PSC should evaluate the evidence in accordance with objective and
consistent standards." Daufuskie Island Util. Co. v. S.C. Office of Regul. Staff, 427
S.C. 458, 463, 832 S.E.2d 572, 574–75 (2019). Nonetheless, the PSC is permitted
to modify its existing policies or practices, as it is "not bound by its prior decisions,
and it may re-examine and alter its previous findings as to reasonableness when
conditions warrant." S. Bell Tel. & Tel. Co. v. Pub. Serv. Comm'n, 270 S.C. 590,
610, 244 S.E.2d 278, 288 (1978) (Ness, J., concurring in part and dissenting in
part); see also 73A C.J.S. Public Administrative Law and Procedure § 352 (June
2021 Update) (explaining that stare decisis does not ordinarily bind administrative
bodies to their prior decisions—or the principles and policies underlying those
decisions—and that while prior decisions are entitled to great weight, so long as
the administrative body rationally justifies its change of position, it may depart
from prior rule or practice).

On appeal, this Court's review of PSC decisions is governed by section 1-23-380 of
the South Carolina Code (Supp. 2020). Daufuskie, 427 S.C. at 463, 832 S.E.2d at
575. Pursuant to that statute, the Court may not substitute its judgment for an
agency's judgment as to the weight of the evidence on questions of fact. S.C. Code
Ann. § 1-23-380(5). Rather, we may reverse or modify an administrative decision
only when the findings or conclusions are affected by an error of law, clearly
erroneous, or arbitrary and capricious. Id. § 1-23-380(5)(d)–(f).

In the same vein, we have repeatedly recognized that the General Assembly has
designated the PSC as the "expert" in regulating rates and services of public
utilities in the state. See Seabrook Island Prop. Owners Ass'n v. S.C. Pub. Serv.
Comm'n, 303 S.C. 493, 496, 401 S.E.2d 672, 674 (1991); see also, e.g., Duquesne
Light Co. v. Barasch, 488 U.S. 299, 313 (1989) (explaining a state's public utilities
commission "is essentially an administrative arm of the legislature"); Hamm v. S.C.
Pub. Serv. Comm'n, 309 S.C. 282, 287, 422 S.E.2d 110, 113 (1992) ("The [PSC]
sits as the trier of facts, akin to a jury of experts."); Patton v. S.C. Pub. Serv.
Comm'n, 280 S.C. 288, 291, 312 S.E.2d 257, 259 (1984) ("The [PSC] is recognized
as the 'expert' designated by the legislature to make policy determinations
regarding utility rates; thus, the role of a court reviewing such decisions is very
limited."). As a result, the Court generally affords the PSC a wide range of
discretion in utility ratemaking cases. Seabrook Island Prop. Owners Ass'n, 303
S.C. at 496, 401 S.E.2d at 674. "We [therefore] will not substitute our judgment
for that of the PSC where there is room for a difference of intelligent opinion."
Utils. Servs. of S.C., Inc. v. S.C. Office of Regul. Staff, 392 S.C. 96, 103, 708
S.E.2d 755, 759 (2011) (citation omitted); see also S. Bell Tel. & Tel. Co., 270 S.C.
at 597–98, 244 S.E.2d at 282 ("The weighing of the evidence and the drawing of
the ultimate conclusion therefrom as to what return is necessary to enable a utility
to attract capital is for the [PSC], not the reviewing court. . . . The reason for that
status is not expertness [of the Commissioners] in fact, but the circumstance that
the [PSC] is the delegatee of the power of the Legislature." (citation omitted)).

Likewise, the Court must view the PSC's findings on appeal as "presumptively
correct, [and] the party challenging the [PSC's] 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 of the record as a
whole." S.C. Energy Users Comm. v. S.C. Pub. Serv. Comm'n, 388 S.C. 486, 491,
697 S.E.2d 587, 590 (2010).

III.

Coal Ash Expenses

a. Underlying Facts

Two primary witnesses testified on behalf of Duke regarding the utility's coal ash
remediation expenses. The first was Dr. Julius Wright, who testified generally
about the regulatory principles surrounding the recovery of environmental costs.
Wright explained the CCRs at issue here were produced by coal-fired plants
located in both North and South Carolina that were "used and useful in providing
low-cost, reliable power to South Carolina customers for more than a century."
Wright also emphasized Duke's historic practice—and the PSC's historic
approval—of cost sharing between the utility's North and South Carolina
ratepayers, with total system costs being split on an approximately 75/25 basis
between the two states' customers. Wright stated that because of Duke's traditional
practice of power production and cost sharing between Duke's North and South
Carolina customers, "South Carolina's average retail rates have historically been
below the national average." Wright further opined there was "no doubt" the Dan
River spill prompted the North Carolina General Assembly to enact CAMA.13
Nonetheless, Wright testified Duke should be permitted to recover its coal ash
remediation expenses in recognition of the fact that there was a historic practice of
cost sharing between North and South Carolina ratepayers.

Wright also filed a series of exhibits with his testimony indicating that between
2015 and 2018, Duke spent approximately $5.4 billion on coal ash remediation for
its sixteen coal-fired plants in the Carolinas. Of that $5.4 billion, Duke sought to
allocate approximately $1.5 billion to its South Carolina customers. Of note, one
of Wright's exhibits supplied year-by-year figures incurred at each of Duke's coal-
fired plants for coal ash remediation expenses, with DEP seeking a total of $635
million for its eight plants, and DEC seeking $876 million.

The second Duke witness that testified regarding the coal ash remediation expenses
was Jon Kerin, who explained the $1.5 billion in requested costs stemmed from
Duke becoming subject to federal (CCR Rule) and North Carolina (CAMA)
regulatory requirements that mandated closure of Duke's coal ash ponds and other
coal ash storage areas. According to Kerin, Duke had always disposed of its CCRs
in compliance with then-current regulatory requirements and industry practices; the
requested costs here were merely the result of recent changes in the law that
required remediation of Duke's prior coal ash storage practices. Like Wright,
Kerin opined that because "South Carolina customers receive[d] the benefit from
electricity generated at [Duke's] South Carolina and North Carolina plants, [] South
Carolina customers should also share costs from the generation process of
electricity production in both South Carolina and North Carolina," including any
post hoc environmental compliance costs.

Similar to Wright, Kerin filed a series of exhibits with his testimony that addressed
the coal ash remediation costs. Relevant to this appeal, Kerin filed an original and
a revised Exhibit 10, which listed a single number for each of Duke's sixteen plants
representing the total coal ash remediation cost incurred at that location between
2015 and 2018 (i.e., the exhibit did not list year-by-year subtotals for each plant, as
did Wright's exhibits). Kerin's original Exhibit 10 included numbers identical to
those found in Wright's exhibits ($635 million for DEP and $876 million for DEC).

13
Wright did not believe the Dan River spill in any way contributed to the CCR
Rule.
However, Kerin's revised Exhibit 10 presented at the hearing included drastic
changes to those numbers, with DEP's total amount requested revised downward
by nearly one-third—from $635 million to $434 million, an over $200 million
difference—and DEC's total adjusted upward by approximately $20 million.
Neither Kerin nor any other Duke witness provided any explanation for how such
an egregious error in calculating the total, previously-incurred expenses had
occurred.14 Moreover, Wright's more granular exhibits were not similarly revised,
making it unclear at best exactly how much Duke actually sought to recover related
to its coal ash remediation expenses, or how those amounts were calculated.

The South Carolina Office of Regulatory Staff (ORS, one of the respondents here)
also offered two primary witnesses to testify regarding the coal ash remediation
expenses. The first witness, Michael Seaman-Huynh, explained Duke commonly
directly assigned certain costs to its North or South Carolina ratepayers and, often,
those costs were derived from laws or regulations that were specific to each
jurisdiction. Providing specific examples of this practice, Seaman-Huynh cited
Duke's handling of expenses stemming from (1) the Energy Efficient Portfolio
Standard, Clean Smokestacks Act, and Renewable Portfolio Standards, all of
which were North Carolina statutory schemes, the compliance costs of which Duke
directly assigned to its North Carolina customers alone; as well as (2) the
Distributed Energy Resources Act, a South Carolina law for which Duke directly
assigned the compliance costs to its South Carolina customers alone. Seaman-
Huynh also pointed to Duke's allocation to North Carolina ratepayers of some of
the CAMA costs in the instant ratemaking proceeding. According to Seaman-
Huynh, South Carolina customers should be exempt from all incremental cost
differences that were directly attributable to North Carolina state laws, not merely
some of those incremental cost differences.

The second ORS witness was Dan Wittliff, who opined the Dan River spill and
Duke's mismanagement of its coal ash ponds in North Carolina played a deciding
role in the development and implementation of CAMA. According to Wittliff,
North Carolina laws—over which Duke's South Carolina customers had no
meaningful input or control—should not place an additional burden on the
ratepayers in South Carolina, particularly when South Carolina customers did not
receive a meaningful benefit from those laws.

14
Recall this ratemaking proceeding was heard in 2019, while the requested
expenses were allegedly incurred between 2015 and 2018.
After detailing the major differences between CAMA and the CCR Rule, Wittliff
proposed allowing coal ash remediation expenses in full at eight of Duke's sixteen
coal-fired plants, but disallowing in part certain expenses at the other eight plants.
In general, Wittliff recommended allowing any remediation costs associated with
complying with either the CCR Rule or the DHEC consent agreements, but
disallowing at that time the portion of remediation costs associated with complying
with CAMA alone. Wittliff explained for each of the eight affected plants how he
parsed the costs associated with CAMA versus the CCR Rule.

For example, Wittliff explained that two of Duke's North Carolina plants were
retired plants with inactive coal ash ponds. As a result, while CAMA required
closure of the coal ash ponds at both plants, the CCR Rule did not apply to those
plants at all, and therefore, any remediation costs incurred at those two plants were
imposed pursuant to CAMA rather than the CCR Rule.15 Accordingly, for those
two plants, Wittliff recommended disallowing all of the requested remediation
costs.

As a more-nuanced second example, Wittliff testified that DEP's Sutton plant was
classified by the North Carolina General Assembly as high-risk and, therefore, was
required by CAMA to close its coal ash ponds under a greatly accelerated schedule
compared to what would have been required under the CCR Rule. Specifically,
CAMA required Duke to complete the closure of Sutton's coal ash ponds by 2019,
whereas under the CCR Rule, Duke would not have been required to even begin
closing Sutton's coal ash ponds until late 2020. As a result of the hastened closing
schedule, Wittliff explained Sutton's coal ash ponds had to be dewatered and
excavated at an accelerated rate, and Duke was forced to ship two million tons of
CCRs from Sutton's coal ash ponds by rail and by truck over 100 miles away to a
permissible disposal site. The transportation costs were prohibitively expensive,
but were required due to the CAMA deadline and Duke's inability to create a lined
landfill—the only permissible closure method at Sutton under CAMA—in that
timeframe. According to Wittliff, had Duke been permitted to follow the

15
Wittliff acknowledged it was likely the EPA would amend the CCR Rule in the
future to require remediation at those two plants, but opined it was purely
speculative at that point to estimate how much or what type of remediation would
be required until the amendments were actually promulgated. See Util. Solid
Waste Activities Grp., 901 F.3d at 432–34, 449 (finding the CCR Rule's current
exemption for inactive coal ash ponds at retired plants was arbitrary and
capricious, and remanding to the EPA for amendments to the CCR Rule).
guidelines set forth in the CCR Rule instead, much of those expenses could have
been avoided.

Nonetheless, Wittliff agreed with Duke witnesses that the engineering and project-
planning portion of the coal ash remediation expenses at the Sutton facility were
necessarily incurred in order to "synchronize work between all of the coal ash sites
being closed in the next 20 years, as well as to gain synergies between
excavation/capping plans for all the sites." Therefore, Wittliff recommended
allowing those expenses, which he calculated as approximately 14% of the total
requested expenses at Sutton based on similar, average figures at the other Duke
plants.16

Ultimately, the PSC granted Duke $707.9 million in coal ash remediation
expenses, slightly less than half of the $1.5 billion Duke had initially requested
prior to Kerin's revised Exhibit 10. In general, the PSC adopted Wittliff's
conceptual construct as well as his calculations, allowing all environmental
compliance costs associated with the CCR Rule but disallowing those related to
CAMA. The PSC explained its "consistent past practice" was to disallow "costs
incurred as a direct result of one state's laws, which are specific to that
jurisdiction." Reasoning the Dan River spill was the impetus behind the North
Carolina General Assembly's enactment of CAMA, the PSC concluded it would be
unreasonable to require South Carolina customers to pay costs incurred as a result
of Duke's admitted criminal negligence and the resulting unilateral action of the
16
Wittliff additionally recommended that Duke should be able to further recover
some of the construction expenses at Sutton (i.e., costs associated with decanting,
dewatering, excavating, and stacking the coal ash) in the future, at a time when
those expenses could be "attribut[ed] to the CCR rules only and not [] to schedule
or scope changes imposed by CAMA." As we read this portion of his testimony,
Wittliff would recommend the PSC allow Duke to return in the future—when the
CCR Rule would require the utility to begin closing its coal ash ponds at Sutton—
and recover the construction expenses at that time. However, as to any of the
expenses that forever would be associated with CAMA—particularly the "rush"
expenses, such as the cost of rush shipping for the dewatered coal ash—Wittliff
would recommend those amounts be permanently disallowed. At oral arguments,
ORS opposed the possibility of the PSC "belatedly" allowing Duke to recover any
previously incurred costs associated with coal ash remediation. In terms of Duke’s
ability to potentially recover these remediation costs in a future proceeding, the
PSC order speaks for itself. Nevertheless, we express no opinion at this time as to
the propriety of allowing in the future the categories of costs outlined by Wittliff.
North Carolina General Assembly.17 The PSC also noted CAMA did not confer
any benefits to South Carolina ratepayers, nor did the ratepayers have any
opportunity to influence the North Carolina General Assembly's actions since those
legislators did not represent South Carolina ratepayers.18 Nonetheless, the PSC
emphasized several times that the disallowance of CAMA costs was only its
decision "at this time," and future developments could change its position.19

17
We respectfully disagree with the dissent's suggestion that the PSC punished
Duke because it "caused" CAMA to be enacted. The PSC merely stated the
obvious in noting "the spill at Dan River was an impetus for the enactment" of
CAMA. CAMA's clear objective was (and remains) remedial, not punitive.
Perhaps it is fair to associate the concept of punishment with two matters in the
record: (1) Duke's guilty pleas for criminal conduct; and (2) the $100 million
mismanagement penalty imposed in the North Carolina proceedings. Otherwise, in
our judgment, the concept of punishment does not apply. In addition, as we
explain below, the PSC clearly harbored no animus against Duke, for the PSC has
left the door open for Duke to potentially recover CAMA related costs in a future
proceeding.
18
The PSC additionally cited article X, section 5 of the South Carolina
Constitution, which generally prohibits levying taxes or charges upon South
Carolinians "without the consent of the people or their representatives lawfully
assembled," implying South Carolina ratepayers could not be forced to pay for
costs resulting from the actions of the North Carolina General Assembly.
19
Duke filed a petition for rehearing claiming, for the first time, that denying Duke
its CAMA-related costs would violate the dormant Commerce Clause of the United
States Constitution. See generally U.S. Const. art. I, § 8, cl. 3; McBurney v. Young,
569 U.S. 221, 234–37 (2013) (explaining the concept of the dormant Commerce
Clause). The PSC found the argument unpreserved. We agree Duke failed to
preserve this argument for appellate review. See, e.g., Herron v. Century BMW,
395 S.C. 461, 469, 719 S.E.2d 640, 644 (2011) ("[A] party may not raise an issue
for the first time in a petition for rehearing."); Kiawah Prop. Owners Grp. v. Pub.
Serv. Comm'n, 359 S.C. 105, 113, 597 S.E.2d 145, 149 (2004) (holding
unpreserved an issue first broached by the utility in its petition for rehearing to the
PSC).
 b. Analysis

In order to prevail on appeal, Duke must demonstrate that the PSC's orders were
controlled by an error of law, arbitrary and capricious, or clearly erroneous. See
S.C. Code Ann. §1-23-380(5)(d)–(f). Duke primarily insists that disallowing
CAMA costs was an error of law because the costs were reasonably and prudently
incurred in the delivery of power generation services to South Carolina customers.
When pushed at oral argument for a specific case or authority in support of its
contention of legal error, we were directed to a single case—the District of
Columbia Circuit's decision in Northern Virginia Electric Cooperative, Inc. v.
Federal Energy Regulatory Commission, 945 F.3d 1201 (D.C. Cir. 2019)—as
standing for the proposition that the PSC committed legal error. We disagree and
instead find that case supports the PSC's decisions.

In Northern Virginia Electric Cooperative, in a proceeding before the Federal
Energy Regulatory Commission (the Commission), a utility operating in both
North Carolina and Virginia sought to upgrade its electricity transmission grid and
allocate the costs proportionately among its customers in both states. Id. at 1203.
However, the Virginia legislature passed a law requiring the utility to place any
new transmission wires underground, rather than using cheaper overhead wiring,
thereby increasing the cost of the grid upgrade by approximately threefold. Id.
North Carolina customers objected to paying for the costs associated with the
undergrounding, arguing the Virginia legislature mandated undergrounding for
"local aesthetic reasons which did not benefit anyone in North Carolina." Id. at
1206 (internal quotation marks omitted) (citation omitted). The utility and
Virginia customers countered, citing to the historic practice of sharing total system
costs for the utility between its customers in both jurisdictions, and the general rule
that, "'when a system is integrated, any system enhancements are presumed to
benefit the entire system.' Thus, in the mine run of cases, all customers on a grid
benefit from—and share in—the costs of upgrading the grid." Id. at 1207 (internal
alteration marks omitted) (quoting W. Mass. Elec. Co. v. Fed. Energy Regul.
Comm'n, 165 F.3d 922, 927 (D.C. Cir. 1999)). The Commission concluded the
costs of undergrounding should be borne by the Virginia customers alone because
the evidence showed Virginia customers benefitted from undergrounding, while
there was no evidence North Carolina customers directly benefitted from burying
the transmission lines. Id. at 1203; see also Old Dominion Elec. Coop. v. Va. Elec.
& Power Co., No. EL10-49-000, 2014 WL 1097407, at *13 (F.E.R.C. Mar. 20,
2014) ("Parties provide no indication that the Projects were constructed
underground for reliability reasons, [which could indicate a benefit to the entire
grid]. It follows that, as a consequence of these initiatives by the Commonwealth
of Virginia, only Virginia customers benefit from the incremental cost of
undergrounding the facilities. The North Carolina customers do not receive
benefits from the undergrounding of the Projects that justify allocating the
substantially higher costs of undergrounding to these customers." (internal footnote
omitted)), aff'd sub nom. N. Va. Elec. Coop., Inc., 945 F.3d at 1201. The
Commission also noted its "decision represented 'a limited exception' to a general
principle that all of a utility's customers should share the costs of upgrading the
grid." N. Va. Elec. Coop., Inc., 945 F.3d at 1203 (citation omitted).

The District of Columbia Circuit affirmed the Commission's decision. Id. at 1203,
1208. In relevant part, the court cited to the Commission's long-established
adherence to the cost causation principle, "under which a utility should assign costs
to those customers who caused them or benefit from them." Id. at 1207. The court
explained that the cost causation principle underlay the general rule that all
customers of an integrated system are presumed to benefit from, and pay for, any
system upgrades. Id. However, as it related to the costs associated with Virginia's
undergrounding statute, the court concluded the Commission had correctly found
the benefits inured entirely to the benefit of the utility's Virginia customers. Id.
Specifically, the court rejected the argument that there was no "affirmative
evidence that North Carolinians didn't benefit from the undergrounding," citing
"(1) the mountain of evidence that Virginians clamored for the undergrounding; (2)
the Virginia legislature's apparent intent to act for the benefit of its citizens; [and]
(3) the absence of any evidence that North Carolina customers caused or benefitted
from the undergrounding." Id. at 1207–08. The court concluded, "Put it all
together, and it adds up to substantial evidence that Virginians benefited from the
undergrounding but North Carolinians did not." Id. at 1208.

Duke cites this case for the general rule it recites: in an integrated system that
encompasses multiple jurisdictions, system costs are presumed to benefit the entire
system, and, thus, in general, customers from each jurisdiction must pay their
allocable share of the system costs. We take no issue with this general approach.
However, as in the Northern Virginia Electric Cooperative case, we find the
instant case presents one of the "limited exceptions" to the general rule.

Here, there is no evidence of any direct benefit to South Carolinians that stems
from coal ash remediation costs required by North Carolina's CAMA scheme.
Duke presented evidence that South Carolina ratepayers had historically enjoyed
lower utility rates due to the power-generation and cost-sharing arrangement
between the two states. Following the production of that low-cost power, South
Carolinians paid for their pro rata share of any then-applicable environmental
regulations related to disposing of the coal ash generated. CAMA, however, is a
post hoc environmental remediation scheme intended by the North Carolina
General Assembly to ensure the cleanliness, safety, and beauty of North Carolina's
environment and the health of North Carolina's citizens. Duke's reliance on the
power-generation and cost-sharing arrangement conflates the benefits of joint
electricity production with the benefits of cleaning up a previously-legal, unlined
coal ash pond or landfill. The environmental cleanup costs are wholly unrelated to
the current production of power for which South Carolina ratepayers must pay.
Had CAMA never been passed, South Carolina's ratepayers would have enjoyed
the same benefits and low-cost electricity that they received after CAMA's
passage.

The PSC made the factual determination that the CAMA costs sought here neither
directly benefitted Duke's South Carolina customers, nor were they intended to do
so. There is evidence in support of this factual determination. See N. Va. Elec.
Coop., Inc., 945 F.3d at 1207–08 (upholding the Commission's finding that North
Carolinians did not benefit from undergrounding because the utility failed to
introduce evidence to that effect, and because, in passing the undergrounding
statute, the Virginia legislature intended to act for the benefit of its own citizens).
We thus conclude the PSC did not commit an error of law in disallowing CAMA
costs. See Utils. Servs. of S.C., Inc., 392 S.C. at 105, 708 S.E.2d 760 (explaining
that, in evaluating the evidence, the PSC is permitted to find "that some portion of
an expense actually incurred by a utility should not be passed on to consumers").

Failing in its assertion of legal error, Duke next asserts the PSC's decisions
regarding CAMA expenses were arbitrary and capricious. However, Duke
repeatedly characterized this issue—whether the PSC should require South
Carolina ratepayers to pay for expenses caused by another state's laws—as a policy
decision, contending so at least eight times in its briefs. It is true the General
Assembly designated the PSC as the expert in policy determinations with regards
to utility ratemaking, and the Court does not lightly overturn those policy-based
decisions. See Patton, 280 S.C. at 291, 312 S.E.2d at 259 ("The [PSC] is
recognized as the 'expert' designated by the legislature to make policy
determinations regarding utility rates; thus, the role of a court reviewing such
decisions is very limited."). However, the issue before us is more properly
characterized as a factual determination on the benefit, or lack of benefit, to South
Carolina customers from CAMA related remediation costs. It appears Duke
believes that by recasting the findings of the PSC as a mere policy decision, it
makes it an easy leap to assert a legal error. The PSC made a factual determination
that Duke's South Carolina customers did not benefit from the North Carolina-
specific CAMA law. Because there is evidence to support this finding, we may not
rely on contrary evidence and (assuming we were inclined to do so) substitute our
view of the facts for the PSC. As we have already found, Duke has shown no such
legal error.

Moreover, the orders here are not arbitrary or capricious because they comport
with the PSC's long-established adherence to the cost causation principle. As
explained above, North Carolina customers benefit—and were intended to
benefit—from CAMA's requirements, whereas South Carolina customers do not
enjoy a similar, direct benefit. Cf. N. Va. Elec. Coop., Inc., 945 F.3d at 1207–08
(explaining the cost causation principle and making a similar finding in
determining Virginia customers were required to pay for the costs of
undergrounding, but North Carolina customers were not). Thus, as the PSC and
multiple witnesses opined, although the PSC has, in the past, approved generally of
a cost-sharing arrangement between Duke's North and South Carolina customers,
the PSC's disallowance of Duke's CAMA compliance costs was consistent with its
long-standing adherence to the cost causation principle. See id. at 1207 ("Indeed,
as the Commission [correctly] recognized, its departure from its policy of having
all customers pay for upgrading a grid here maintained consistency with the
broader cost causation principle: Though the benefits of conventional grid
enhancement are shared throughout the grid, here Virginians uniquely caused and
benefited from the undergrounding.").

We also find significant the fact that Duke directly allocated certain coal ash costs
to North Carolina customers, including some CAMA costs. While Duke may
disagree with the PSC's factual findings regarding which expenses were unique to
CAMA and North Carolina ratepayers, it apparently does not disagree with the
broader principle that certain costs should not be shared among all of Duke's
customers in both states. We therefore find the PSC's decision was not arbitrary or
capricious.20

20
While not directly relevant to our analysis, at oral argument, counsel for ORS
represented to the Court that (1) the percentage of Duke's coal ash excavation costs
allocated to North Carolina and required to be paid by that state's ratepayers is
approximately the same percentage as that allocated to South Carolina and required
to be paid for by our state's ratepayers; and (2) the remainder of North Carolina's
share of coal ash remediation costs was paid for by Duke's shareholders. Those
facts do not appear in the record, although Duke did not directly dispute them at
oral argument. Regardless, the seminal utility regulation decisions of the United
States Supreme Court stand for the proposition that the results of a ratemaking
proceeding must be fair to ratepayers and shareholders alike. See generally, e.g.,
Finally, Duke avers the PSC's decision was clearly erroneous and unsupported by
the substantial evidence in the record. We disagree. It is clear from the level of
detail set forth in the PSC's orders that it thoroughly and thoughtfully weighed the
testimony and evidence prior to reaching its decisions. Given the voluminous
record, it is unsurprising that some of the witnesses' testimony was conflicting.
However, apparently, the PSC found Wittliff's classifications and calculations of
coal ash remediation costs were the most accurate. "We recognize that the [PSC's]
interpretation of the evidence on this issue is not indisputable, but we cannot
substitute our judgment for that of the [PSC] upon a question as to which there is
room for a difference of intelligent opinion." Parker v. S.C. Pub. Serv. Comm'n,
281 S.C. 22, 24, 314 S.E.2d 148, 149 (1984) (internal alteration and quotation
marks omitted) (citation omitted); see also Hamm v. S.C. Pub. Serv. Comm'n, 294
S.C. 320, 323, 364 S.E.2d 455, 456 (1988) ("This Court is without authority to set
aside an agency's judgment on a factual issue where there is evidence of record to
support the agency's decision."); Lark v. Bi-Lo, Inc., 276 S.C. 130, 136, 276 S.E.2d
304, 307 (1981) (explaining that substantial evidence is "something less than the
weight of the evidence, and the possibility of drawing two inconsistent conclusions
from the evidence does not prevent an administrative agency's finding from being
supported by substantial evidence" (quoting Consolo v. Fed. Mar. Comm'n, 383
U.S. 607, 620 (1966))).

Of equal importance, Duke—as the party with the burden of proof before the
PSC—made no attempt to respond to Wittliff's calculations by offering counter-
calculations or similarly parsing the coal ash remediation costs into the amounts
associated with CAMA versus the CCR Rule. As a result, once the PSC found
CAMA costs could not be imposed on South Carolina customers, it was left with

Hope Natural Gas Co., 320 U.S. at 602–03. To the extent the representations
made by ORS's counsel are correct, we cannot imagine a reason why South
Carolina's ratepayers should be required to pay a higher percentage of our state's
allocable share of coal ash compliance costs than North Carolina's ratepayers. See
id. at 602 ("Under the statutory standard of 'just and reasonable' [rates,] it is the
result reached[,] not the method employed[,] which is controlling. It is not theory
but the impact of the rate order which counts. If the total effect of the rate order
cannot be said to be unjust and unreasonable, judicial inquiry . . . is at an end. The
fact that the method employed to reach that result may contain infirmities is not
then important."). In any event, while we note this argument by ORS's counsel,
because those facts do not appear in the record, we do not rely on them in our
analysis or in reaching our holding today.
one set of numbers—Wittliff's—on which to base its final decision. Essentially,
Duke took a gamble by pursuing an all-or-nothing stance with regards to the coal
ash remediation costs and lost. That does not make the PSC's decision clearly
erroneous or unsupported by substantial evidence.

Duke additionally argues Wittliff's testimony is unreliable and imprecise. For
example, Duke criticizes Wittliff for relying on the total costs found in Kerin's
original Exhibit 10, rather than Kerin's belatedly-filed, revised Exhibit 10.
However, as alluded to above, it is unclear whether Wittliff truly erred in doing so,
as Wright's exhibits (1) used identical numbers to Kerin's original Exhibit 10; (2)
were more granularly detailed, in that they were broken down year-by-year, plant-
by-plant; and (3) were not similarly updated.21 We agree with the PSC that
Wittliff's calculations are well-explained and reasonably certain. We find no abuse
of discretion in his method of calculating the coal ash remediation expenses
attributable to CAMA or the CCR Rule. See Porter v. S.C. Pub. Serv. Comm'n,
328 S.C. 222, 230, 493 S.E.2d 92, 97 (1997) ("We find no abuse of discretion in
averaging the amount of net income generated as a practical means of determining
the adjustment for customer growth, especially since the actual amount of income
generated for a particular customer is not a readily ascertainable amount.").

21
Moreover, even assuming Kerin's revised Exhibit 10 was the most accurate
representation of Duke's coal ash remediation expenses, we find it ironic that Duke
apparently does not realize that any possible error in Wittliff's calculations (based
on Kerin's original Exhibit 10) inured to Duke's benefit. Specifically, for at least
three of Duke's plants, the PSC allowed Duke more in remediation costs than it
actually requested. For example, for DEP's Mayo plant, Duke originally requested
$25.4 million per Wright's and Kerin's original exhibits. In Kerin's revised Exhibit
10, the amount requested was revised down to $13.7 million. Nonetheless, the
PSC allowed Duke $25.4 million—$11.7 million more than Duke actually
requested. The total amount of the indisputable errors of this type for both Duke
entities was a net $22 million in over-recovery for Duke. See, e.g., Porter v. S.C.
Pub. Serv. Comm'n, 328 S.C. 222, 230, 493 S.E.2d 92, 97 (1997) ("Absolute
precision [in calculating the amount a utility should be allowed to collect from its
ratepayers] is not required . . . ." (citation omitted)); Hamm, 309 S.C. at 291, 422
S.E.2d at 115 (same). More importantly, none of the parties noticed or raised this
error; we only discovered it during our review of the record. While the Court may
affirm a lower court's decision on any basis appearing in the record, it may not
similarly reverse a decision unless the particular grounds for reversal have been
raised by the parties. See Rule 220(c), SCACR.
Overall, the PSC "parsed all of the evidence presented during the hearing and
provided a detailed summary of all of the testimony on which it based its very
technical findings. Thus, there is no doubt that the [PSC's] findings are supported
by substantial evidence . . . ." S.C. Energy Users Comm. v. S.C. Elec. & Gas, 410
S.C. 348, 361, 764 S.E.2d 913, 919 (2014). As a result, we find Duke has failed to
demonstrate that the PSC's factual findings are unsupported by reliable, probative,
and substantial evidence. See S.C. Energy Users Comm., 388 S.C. at 491, 697
S.E.2d at 590 (explaining that, on appeal, the Court must view the PSC's findings
as "presumptively correct," and the party who is challenging the PSC's order bears
the burden to show the decision is unsupported by substantial evidence).

We finally address the dissent's argument that excluding remediation costs
concerning the Cliffside, Riverbend, and Allen plants "from Duke's rate base . . . is
arbitrary."22 As to these three Duke plants, the dissent contends "the stringent
CAMA requirements clearly and directly benefit citizens of South Carolina." The
dissent selected these three plants (out of Duke's fourteen North Carolina plants)
because of their proximity to the South Carolina border and the contention that the
PSC disallowed Duke's remediation expenses at the three plants. Two of the plants
(Riverbend and Allen) abut the Catawba River, which flows into South Carolina.
The third plant (Cliffside) abuts the Broad River, which also flows into South
Carolina. Yet the dissent acknowledges "[t]his was not a point on which the
parties presented extensive evidence." We agree that the dissent's argument—
proximity to South Carolina rivers by itself establishes that CAMA requirements
"clearly and directly benefit" South Carolinians—was never developed by Duke
before the PSC, thus explaining why there is scant evidence in the record. We first
recognize the procedural bar to the dissent's approach, for an appellate court may
not reverse on an issue not raised and preserved for review. See Rule 220(c),
SCACR. There is an even more fundamental reason why Duke has never made the
argument advanced by the dissent—the PSC allowed full recovery to Duke at two
of these three plants.

The PSC awarded Duke full recovery for its coal ash remediation expenses at the
Cliffside and Allen plants. Duke's remediation efforts at Cliffside and Allen were
22
Much of the dissent consist of arguments Duke has never made. It is a basic
tenet of appellate law that appellate courts do not reverse based on issues and
arguments never made by an appellant. We comment on the alleged error of the
PSC in "exclud[ing] those costs [from the Cliffside, Allen, and Riverbend plants]
from Duke's rate base" only because it is largely untrue—the PSC awarded Duke
its costs associated with the Cliffside and Allen plants.
required pursuant to both CAMA and the CCR Rule. Because there was no
opposition to Duke recovering all remediation expenses at the Cliffside and Allen
plants, the PSC allowed all such costs to be included in Duke's rate base. Simply
stated, Duke prevailed. This explains why Duke presented no objection
concerning these two plants. The dissent's position that these expenses were
"exclude[d] . . . from Duke's rate base" is factually incorrect.

That leaves only the Riverbend plant. Riverbend is located just north of Charlotte,
North Carolina, and is an inactive plant with inactive coal ash ponds, meaning the
CCR Rule does not apply to it at this time.23 However, under CAMA, the North
Carolina General Assembly singled out Riverbend as a high-risk plant whose coal
ash ponds had to be shut down on an accelerated schedule. Because the CCR Rule
does not currently apply to Riverbend, Wittliff recommended the PSC disallow all
remediation costs at Riverbend at this time—a recommendation which the PSC
adopted.

Moreover, it is pure speculation what, if any, benefits South Carolina ratepayers
received from Duke's coal ash remediation efforts at Riverbend. There was no
spill from the Riverbend plant. There is no evidence in the record that suggests a
hypothetical spill at Riverbend would definitively travel far enough downstream so
as to affect South Carolina's rivers or environment. Duke had the burden of
proving to the PSC that the coal ash remediation costs at Riverbend inured to the
benefit of its South Carolina customers. N. Va. Elec. Coop., Inc., 945 F.3d at
1207–08. Again, Duke made no attempt to establish anything to that effect, other
than its general argument that all CAMA costs at all North Carolina plants should
be allowed. As such, we are constrained to find (1) Duke failed to shoulder its
burden of proof, and therefore (2) the PSC's decision to disallow the costs at
Riverbend is supported by substantial evidence.

Accordingly, we affirm the portions of the PSC's orders dealing with coal ash
remediation expenses.

23
Recall the District of Columbia Court of Appeals found the CCR Rule's
exemption of inactive coal ash ponds at retired plants was arbitrary and capricious
and remanded the rule to the EPA for further consideration. The EPA's
reconsideration of this issue could affect the ability of Duke to recover its expenses
related to the Riverbend plant.
 IV.

Litigation Expenses

a. Underlying Facts

Duke requested nearly $1 million in legal fees related to coal ash litigation
expenses: $390,000 for DEP, and $575,000 for DEC. The utility broadly claimed
the expenses were related to ongoing insurance litigation and defending itself in an
unspecified number of state enforcement actions. However, Duke made no effort
to separately itemize the expenses for each of those two categories of cases, or to
explain in any more detail what claims or defenses the cases involved, or how
pursuing or defending the cases served the interests of South Carolina ratepayers.

ORS opposed Duke's request for litigation expenses, recommending the PSC limit
Duke's recovery to only those expenses that were supported by sufficient
explanation and not merely incomprehensible invoices.24 ORS witness Steven
Hamm testified Duke's request for litigation expenses was inappropriate due to
"the extremely summary explanation provided by [Duke] to ORS['s] discovery
inquiries." Hamm and others testified that, based on Duke's perfunctory
justification for and documentation of the litigation expenses, it was impossible to
determine whether "some or all of the litigation expenses were [incurred]
defending claims that [Duke] violated state or federal law." Hamm opined that, to
the extent the litigation expenses were incurred in cases stemming from illegal
conduct or mismanagement, such as the Dan River spill, Duke was attempting to
seek recovery of legal expenses that were not related to providing adequate
electrical service to customers and from which customers derived no benefit.
Thus, those "legal costs should be the shareholders' responsibility, which . . . in
turn[] incentivizes the regulated utilities to operate in compliance with federal,
state, and local law."

Towards the end of the PSC hearing, in response to ORS's criticism that Duke had
not sufficiently documented its claimed expenses, the utility belatedly introduced a
1,500 page spreadsheet documenting every action taken by any attorney associated

24
For example, in support of its claimed litigation expenses, Duke submitted
spreadsheets of large expenses with brief explanations such as $125,114.72 for
"legal fees and expenses related to potential insurance recovery for coal ash."
Moreover, there were multiple entries with this explanation and approximately this
dollar amount.
with any of the insurance or state enforcement actions. More importantly, along
with the spreadsheet, Duke submitted an eight page explanation of the procedural
posture and underlying facts of each of the cases for which Duke sought litigation
expenses.

Ultimately, the PSC found Duke failed to provide sufficient evidence to
substantiate its claimed litigation expenses, concluding Duke did not carry its
burden to prove the expenses were reasonable or necessary or that the ratepayers
derived any benefit from the expenditures. The PSC found significant that Duke
made no attempt to calculate the number of hours billed or total amount sought for
each case, instead leaving that task to the PSC or ORS. Likewise, Duke made no
attempt to justify its reasons for pursuing, defending, or settling any of the cases.
Rather, as the PSC explained, Duke "was on notice in late 2018[25] that ORS was
seeking discovery and substantial evidence supporting its rate case claim that all
[Duke's] coal ash legal expenses were reasonable and should be paid by [Duke]
customers in their utility rates." Nonetheless,

No [Duke] witness was offered before the [PSC] to present and
explain the individual line-item legal and expense summary and dollar
amounts listed in the computer print outs provided by [Duke] to ORS
in discovery. The Record reflects that [Duke] made no effort to
explain or justify the additional legal expense printouts presented on
the last day of the [ratemaking] hearing. (See Ex. 71.) Just as
important, [Duke] made no effort to present evidence confirming
which case or dispute was associated with each individual dollar
amount entry on the new computer printouts. . . .

A brief review of the coal ash legal summary information provided to
ORS in discovery reveals that [Duke] s[ought] to require its customers
to defend law suits filed by the state of North Carolina against [Duke].
(See Ex. 67 (. . . "Defense of coal ash state enforcement litigation").)
[Duke] made no efforts to explain to the [PSC] why its customers
should be responsible for paying any legal cost or expense related to
coal ash discharges when [Duke] earlier [pled] guilty to criminal
negligence in mishandling its coal ash management responsibilities at
Dan River. . . .

25
The PSC hearings were held March 21–27, 2019 (DEC), and April 11–17, 2019
(DEP).
 ....

An examination of [Duke's] responses to ORS legal expense
discovery filings merely reflects a series of dollar amounts without
any reference to the specific litigation matter prompting the litigation
expense in the first place. [Duke] failed to provide the [PSC] with any
basis to support a claim that customers are responsible [for]
reimbursing [Duke] since the data provided by [Duke] is devoid of
any case specific identifying data. [Duke] must substantiate the
expenses for which it s[ought] recovery, and [Duke] has failed to do
so.

(Emphasis added.)

Duke's argument in its petition for rehearing on this issue was cursory at best,
encompassing a single double-spaced page. In particular, Duke argued it was
entitled to a presumption of the reasonableness of its litigation expenses, that its
coal ash litigation expenses related to the "normal and prudent operations of an
enterprise like" Duke, and that the litigation (particularly, the insurance litigation)
would benefit ratepayers if Duke was successful. Therefore, Duke argued, the
PSC's decision was arbitrary and capricious.

In response to Duke's petition for rehearing, the PSC further explained it could not
"presume that the expenses a utility seeks to recover in its rates and charges are
legitimate if they cannot be subjected to the scrutiny of an audit or examination."
Thus, "absent more detailed information by way of which the [PSC] could
determine with more certainty whether recovery of these expenses from the
ratepayers would be just and reasonable," the PSC ruled Duke "had failed to carry
its burden."

b. Analysis

Duke now argues it was not given sufficient opportunity to provide supporting
documentation for its litigation expenses. Duke contends that, prior to the PSC
hearing, ORS did not give Duke any notice that the 121,000 pages of discovery
produced were inadequate to verify Duke's litigation expenses. Duke likewise
complains that ORS asked the wrong discovery questions for the information it
sought because "ORS did not request matter descriptions, factual inquiries, case
summaries, contracts, or other documents."

Duke has failed to preserve its current argument because it did not present the
argument to the PSC initially or in its petition for rehearing. We therefore affirm
pursuant to Rule 220(b)(1), SCACR, and the following authorities: McLeod v.
Starnes, 396 S.C. 647, 657, 723 S.E.2d 198, 204 (2012) ("A party may not argue
one ground at trial and an alternate ground on appeal." (citation omitted)); Brown
v. S.C. Dep't of Health & Env't Control, 348 S.C. 507, 519, 560 S.E.2d 410, 417
(2002) ("[I]ssues not raised to and ruled on by [an administrative] agency are not
preserved for judicial consideration.").

Moreover, even if this issue were preserved, we agree with the PSC's conclusion
that Duke failed to shoulder its burden of proof. First, Duke did not break down its
litigation costs case-by-case or even in a summary fashion that would be easily
understood by the fact finder. It may have been technically possible for the PSC or
ORS to sort through the 1,500 page spreadsheet and parse the data themselves.
However, we decline to impose a requirement that they do so, particularly since
Duke had the burden of proof.

Likewise, and more importantly, none of Duke's witnesses explained the lengthy
spreadsheets, the actions detailed therein, or how those actions benefitted Duke's
ratepayers, if at all. Thus, we agree with the PSC that it was impossible to tell if
any of the cases included in the spreadsheet benefitted the ratepayers in any
quantifiable way. See, e.g., Hilton Head Plantation Utils., Inc. v. Pub. Serv.
Comm'n, 312 S.C. 448, 451, 441 S.E.2d 321, 323 (1994) (explaining that "a mere
showing of actual payment does not establish a prima facie case of
reasonableness," and rejecting the utility's argument that "all amounts paid were
reasonable simply because they were paid").

Accordingly, we affirm the PSC's decisions as to the litigation expenses issue.

V.

Carrying Costs for Deferred Accounts

a. Underlying Facts

The Court has previously "approved the historical test year as a basis for
calculating a utility's rate base so long as adjustments are made for any known and
measurable out-of-period changes in expenses, revenues, and investments that
would materially alter the rate base." Porter, 328 S.C. at 228–29, 493 S.E.2d at 96
(explaining the concept of the historical test year in more detail). The historical
test year recognizes that ratemaking is a prospective process in which customers
who currently use the system pay for its production, rather than requiring future
ratepayers to pay for past use. Id. at 231, 493 S.E.2d at 97. However, in certain
situations, test year expenses may be adjusted to allow recovery for so-called
deferred charges, i.e., expenses actually incurred before the test year. Id. at 231–
33, 493 S.E.2d at 97–98.

These deferred expenses generally come in one of two forms: (1) capital costs or
(2) operations and maintenance costs. Capital costs can include things like the
value of power-production plants, equipment (e.g., scrubbers for coal plants, a fleet
of company vehicles, computers), any purchased land, and the like. A utility is
normally entitled to earn a rate of return on its capital costs because the utility is
essentially allowing the public to use what would otherwise be the utility's private
property. Therefore, the Supreme Court and state legislatures have all recognized
that some degree of profit above and beyond the actual cost of the property is
proper to avoid the public "taking" the property without just compensation to the
utility. See, e.g., Bluefield, 262 U.S. at 690 ("Rates which are not sufficient to
yield a reasonable return on the value of the property used at the time it is being
used to render the services are unjust, unreasonable and confiscatory, and their
enforcement deprives the public utility company of its property in violation of the
Fourteenth Amendment. . . . What the company is entitled to ask is a fair return
upon the value of that which it employs for the public convenience. There must be
a fair return upon the reasonable value of the property at the time it is being used
for the public." (internal citations omitted) (internal quotation marks omitted)).

In contrast to capital costs, operations and maintenance costs are the normal
business costs associated with keeping the utility running. These can include
things like telephone bills, internet bills, overhead, payroll, insurance, taxes, and
the like. Compared to capital costs, operations and maintenance costs tend to be
relatively minor in comparison to a utility's revenue. Operations and maintenance
costs are normally recovered dollar-for-dollar by the utility, without receiving a
rate of return, as there is no need to compensate the utility for the use of its
property. In other words, while the utility nominally pays the operations and
maintenance costs, those costs are fully passed through to consumers, so the
operations and maintenance costs do not actually "cost" the utility any of its own—
or its shareholders'—money.

Here, with the PSC's permission, Duke created deferred accounts for several
expenses, all of which involved operations and maintenance costs. As with all
deferred accounts, Duke paid the expenses on behalf of its customers but did not
seek immediate recovery via a new ratemaking application.

Subsequently, in the instant ratemaking proceeding, Duke requested the PSC allow
it to recover the amounts in the deferred accounts, and additionally recover
carrying costs in recognition of the delay in seeking recovery of the deferred
amounts from its ratepayers. Duke argued the amounts represented in the deferred
accounts would otherwise rightfully be the shareholders' money via payment of
stocks and dividends. In Duke's opinion, the creation of a deferred account
essentially borrowed money from the shareholders on behalf of the ratepayers, and
therefore the ratepayers should have to pay the utility and its shareholders back
with interest. Essentially, Duke's argument reflected the old adage: a dollar on
hand today is worth more than a dollar to be received in the future. Thus, although
Duke acknowledged that operations and maintenance costs generally were not
subject to carrying costs, it nonetheless believed carrying costs were required in
this instance in order to make the shareholders'—and the time-value of their
money—whole.

In response, ORS contended there were three primary problems with Duke's
position. First, ORS pointed out that were it not for the operations and
maintenance costs having been deferred, Duke would not have been entitled to a
carrying costs on those expenses. According to ORS, Duke collected $562 million
in operations and maintenance expenses in 2017 (the test year for this ratemaking
proceeding), so the money to pay for deferred expenses and support its operations
did not necessarily come from shareholders.

Second, ORS expressed concern that, if the PSC were to routinely allow carrying
costs on deferred accounts created for operations and maintenance costs, it would
incentivize utilities to create deferred accounts on a more frequent basis for less-
than-extraordinary expenses, thus entitling the utility to more of a profit than it
otherwise could expect. The impact of the frequent creation of deferred accounts,
particularly for operations and maintenance costs, would be to "greatly inflate[]
costs in future years which w[ould] be passed on to customers through rates."

Third, ORS asserted that, in accordance with fundamental regulatory accounting
principles, operations and maintenance costs were not entitled to carrying costs
and, therefore, were inappropriate to include with other rate base (i.e., capital cost)
items. As one ORS witness explained at the PSC hearing:

Out-of-year expenses include[d] approximately $5,000,000 in
amortization expense. ORS's recommended accounting treatment
contribute[d] approximately $3,500,000 to the ORS original proposed
revenue increase of $32,130,000--more than 10 percent. In
comparison, [Duke's] deferred balance proposal include[d]
approximately $16,000,000 in amortization expense and
approximately $21,000,000 in unamortized deferral balances in rate
base. [Duke's] recommended treatment contribute[d] roughly
 $18,000,000 (more than 25 percent) to [Duke's] proposed revenue
increase of $68,668,000.

(Emphasis added.) Thus, according to ORS, when viewed within the context of
the entire rate case, Duke's overall strong financial position, and the needs of
Duke's customers, "ORS's proposals represent[ed] a reasonable and equitable
approach to [Duke's] recovery of deferred costs."

Ultimately, the PSC allowed Duke full, dollar-for-dollar recovery of the amounts
deferred—the standard practice for non-deferred operations and maintenance costs.
However, the PSC disallowed Duke the requested carrying costs. The PSC
concluded that to rule in favor of Duke's position would encourage the utility to
seek more accounting deferrals in the future, which would "greatly inflate costs in
future years, which w[ould] be passed on to customers through rates." The PSC
explained it generally set rates based on a historic test year, and allowing
unconditional carrying costs on all deferrals incurred in years prior to the test year
"would represent a significant departure from this fundamental standard."

The PSC also emphasized that ratemaking was a prospective process, in which it
used the historical test year to set rates for estimated future costs within a
reasonable degree of certainty, subject to any adjustments for known and
measurable out-of-period changes in expenses, revenues, and investments:

The purpose of this regulatory scheme of using a test year and making
adjustments based on atypical conditions is to permit sufficient and
accurate cost recovery as the expenses are incurred by the utility in
real-time. In other words, the purpose of this ratemaking exercise of
using a test year and making appropriate adjustments is to match—as
closely as possible—the utility's revenue to the costs it will incur after
the rates are implemented. In that regulatory context, there is no need
to consider the time value of money or the carrying costs of debt
because the utility's revenue matches its expenses as they are
incurred.

(Emphasis added) (internal citations omitted).

Duke filed a petition for rehearing, but the PSC affirmed its initial decision. The
PSC noted:

Treatment of deferrals is ultimately a matter of the [PSC's] discretion.
The [PSC] has a duty to balance the needs of the public and the utility
such that the public is served without the utility being disserved. This
 approach [denying carrying costs in the initial order] represents
exactly such a balance.

b. Analysis

This issue presents a quintessential policy determination to which there is no one
right answer. Duke and ORS both raised valid points about the pros and cons to
each side's position. The PSC was faced with a policy decision and made a choice.
There is certainly evidence in the record to support its conclusion, and we therefore
decline to reverse the PSC's decision, particularly given that the PSC generally
approaches the question of the propriety of carrying costs on deferred accounts on
a case-by-case basis to better consider the individual impact on the utility and the
ratepayers. See Utils. Servs. of S.C., Inc., 392 S.C. at 103, 708 S.E.2d at 759
("[This Court] will not substitute [its] judgment for that of the PSC where there is
room for a difference of intelligent opinion." (citation omitted)); Patton, 280 S.C.
at 291, 312 S.E.2d at 259 ("The [PSC] is recognized as the 'expert' designated by
the legislature to make policy determinations regarding utility rates; thus, the role
of a court reviewing such decisions is very limited."); S. Bell Tel. & Tel. Co., 270
S.C. at 597–98, 244 S.E.2d at 282 ("The weighing of the evidence and the drawing
of the ultimate conclusion therefrom as to what return is necessary to enable a
utility to attract capital is for the [PSC], not the reviewing court."). We therefore
affirm the PSC's decisions as to the carrying costs issue.

VI.

Construction Costs for the Lee Nuclear Project

a. Underlying Facts and the Base Load Review Act

In normal ratemaking proceedings, every rate asked for by the utility and approved
by the PSC must be just and reasonable. S.C. Code Ann. § 58-27-810 (2015).
Likewise, the General Assembly has specified that there is a "critical need to []
protect customers from rising utility costs." Id. § 58-27-845(A)(1) (Supp. 2020).
As a result, in fixing just and reasonable rates, the PSC is required to consider the
prudence of the utility's expenditures "to discourage the wasteful use of public
utility services while promoting all use that is economically justified in view of the
relationships between costs incurred and benefits received." Id. § 58-27-845(C).

To become entitled to collect new rates, a utility must file an application for
ratemaking with the PSC and ORS in which it sets forth a proposed rate schedule.
Id. § 58-27-820 (2015). After the utility files its proposed schedule, the PSC is
required to hold a public hearing concerning the reasonableness of the proposed
changes, and is further required to issue an order ruling on the proposed rates
within a specified amount of time. Id. § 58-27-870 (2015). In practical terms,
therefore, a utility must justify the prudency of its past-incurred expenses every
time it comes in for a new ratemaking proceeding.

Thus, prior to the enactment of the BLRA,

[A] utility's decision to build a base load generating plant was subject
to relitigation if parties brought prudency challenges after the utility
had committed to major construction work on the plant. The
possibility of prudency challenges while construction was underway
increased the risks of these projects as well as the costs and difficulty
of financing them.

S.C. Energy Users Comm., 410 S.C. at 359, 764 S.E.2d at 918.

The BLRA was intended to cure that problem. Id. Specifically, "the General
Assembly sought to mitigate such uncertainty by providing for a comprehensive,
fully litigated and binding prudency review before major construction of a base
load generating facility begins." Id. (emphasis added); see also S.C. Energy Users
Comm., 388 S.C. at 494–95, 697 S.E.2d at 592 (discussing the legislative intent
behind the BLRA). Thus, if a utility filed a BLRA application, and it was able to
establish the prudency of building a nuclear plant and incurring—in the future—all
of the associated costs with that construction, then it could recover
"preconstruction" costs through rates from ratepayers before it had spent any of its
own money, thereby placing all of the risk for the failure of that project on the
ratepayers, rather than on the utility. See S.C. Code Ann. § 58-33-225.
Preconstruction costs were specifically defined in the BLRA to include AFUDC
(allowance of funds used during construction). Id. § 58-33-220(1), (12).
Essentially, AFUDC is another word for carrying costs, and is "calculated
according to regulatory accounting principles." Id. § 58-33-220(1). Thus, an award
of preconstruction costs automatically included carrying costs/AFUDC under the
BLRA.

The only exception to a utility's ability to recover preconstruction costs was if a
subsequent proceeding showed that individual costs items were imprudently
incurred. Id. § 58-33-225(E). Other than that exception, prudency determinations
could "not be challenged or reopened in any subsequent proceeding including
proceedings under [the general ratemaking proceedings statutes]." Id. § 58-33-
225(H) (emphasis added); id. § 58-33-275(A) ("A base load review order shall
constitute a final and binding determination that a plant is used and useful for
utility purposes, and that its capital costs are prudent utility costs and expenses and
are properly included in rates . . . ."); id. § 58-33-275(B) (stating the "used and
useful" and prudency determinations made under section 58-33-275(A) "may not
be challenged or reopened in any subsequent proceeding, including proceedings
under [s]ection 58-27-810"). The BLRA expressly contemplated the possibility of
filing an application for preconstruction costs under the BLRA, as well as an
application for post-construction costs—that, for whatever reason, the utility had
not recovered under the BLRA—under the general ratemaking statutes (sections
58-27-810, -820, and -870). See id. § 58-33-230(E); id. § 58-33-275(B).
However, as explained above, the latter proceeding (under the general ratemaking
statutes) would require the utility to establish the prudency of the expenditure of
those already-spent, post-construction funds.

Here, DEC filed two applications under the BLRA in 2007 and 2011, eventually
receiving permission from the PSC to incur up to $350 million in preconstruction
costs through June 2012. DEC was also required to file quarterly reports with the
PSC and ORS on expenditures and AFUDC, which it did.

Thereafter, DEC pursued the Lee Nuclear Project but experienced a number of
delays that were largely out of its control. Eventually, following the 2017 V.C.
Summer nuclear fiasco—which did not involve Duke—DEC decided to abandon
the project entirely. By that point, it had incurred actual costs of $558 million for
things such as land and right-of-way purchases, site preparation, and pursuing its
combined license application with the United States Nuclear Regulatory
Commission. Because the General Assembly had repealed the BLRA in the
interim, DEC filed a general ratemaking application to recover those funds, of
which South Carolina's allocable share was $125 million (including AFUDC).
During the subsequent PSC hearing, there was no dispute that DEC had already
spent this money, so these were not true "preconstruction" costs under the BLRA.
As a result, because there was no BLRA-related predetermination of the prudency
of the expenditures, DEC had to prove the prudency of the costs at the hearing.

Ultimately, the PSC allowed DEC to recover the $125 million over the course of
the next twelve years, classifying the amount as "prudently incurred abandoned
plant costs." The PSC noted that "[n]o other party to this proceeding[, including
SCEUC,] presented testimony in opposition to [DEC's] recovery of its costs for the
Lee Nuclear Project."

SCEUC filed a petition for rehearing, arguing that because DEC had initially
proceeded under the BLRA to recover preconstruction costs, and the BLRA had
been repealed, DEC could not now proceed under a general ratemaking application
to recover "preconstruction" costs. SCEUC also specifically took issue with the
portion of the $558 million that comprised AFUDC. In particular, SCEUC
contended the PSC had approved of preconstruction costs—including AFUDC—of
$350 million through June 2012, and by that date, DEC had incurred $68 million in
AFUDC. However, six years later, when DEC filed its general ratemaking
application, the AFUDC costs had ballooned to $248 million. Thus, SCEUC
contended DEC's unexplained six year delay in filing either a BLRA application or
a general ratemaking application had "rewarded" DEC with an additional $180
million in AFUDC (from $68 million to $248 million).

The PSC denied SCEUC's petition for rehearing. In relevant part, the PSC found
the repeal of the BLRA did not entirely foreclose DEC from recovering post-
construction and abandonment costs associated with the Lee Nuclear Project.
Rather, the PSC concluded:

[N]either the passage nor the repeal of the BLRA preclude[d] the
utility from recovering abandonment costs through base rate cases.
Had the General Assembly intended Act 258 [repealing the BLRA26]
to prohibit entirely the recovery of these costs, it could have included
an explicit provision to that effect in the legislation, but it did not. We
cannot, therefore, infer that Act 258 bars recovery in the manner
argued by SCEUC. See Tilley v. Pacesetter [Corp.], 333 S.C. 33, 40,
508 S.E.2d 16, 20 (1998) [(per curiam)] (had the legislature intended a
specific remedy for certain Consumer Protection Code violation to be
exclusive of any others, it would have so specified. However, because
it did not, another statutory remedy was also available).

b. Analysis

SCEUC argues the intent of the General Assembly in repealing the BLRA was "to
protect ratepayers from nuclear costs that were not used [or] useful for providing
electricity," including nuclear-plant abandonment costs. SCEUC contends that
because DEC initially filed BLRA applications, it was foreclosed from changing
course in the future (even if the BLRA had not been repealed) and filing general
ratemaking applications instead. We disagree.

As this Court has explained:

26
See generally Act No. 258, 2018 S.C. Acts 1872.
 The cardinal rule of statutory construction is to ascertain and
effectuate the intent of the legislature. Under the plain meaning rule,
it is not the court's place to change the meaning of a clear and
unambiguous statute. Where the statute's language is plain and
unambiguous, and conveys a clear and definite meaning, the rules of
statutory interpretation are not needed and the court has no right to
impose another meaning. What a legislature says in the text of a
statute is considered the best evidence of the legislative intent or will.
Therefore, the courts are bound to give effect to the expressed intent
of the legislature.

Hodges v. Rainey, 341 S.C. 79, 85, 533 S.E.2d 578, 581 (2000) (internal citations
omitted) (internal quotation marks omitted). Likewise, we have repeatedly held
that if the legislature intended a particular statute or remedy to be the exclusive
path for a litigant to follow, "it could have specifically provided that." Tilley, 333
S.C. at 40, 508 S.E.2d at 20; Hainer v. Am. Med. Int'l, Inc., 328 S.C. 128, 134, 492
S.E.2d 103, 106 (1997) (explaining that if the "Legislature had intended [a] certain
result in [a] statute, it would have said so" (citing Estate of Guide v. Spooner, 318
S.C. 335, 457 S.E.2d 623 (Ct. App. 1995))).

In 2018, the General Assembly repealed the BLRA and prohibited any future
awards under that Act unless a BLRA application was pending by June 28, 2018.
Act No. 258, 2018 S.C. Acts at 1872. DEC did not have a BLRA application
pending by that date and was thus prohibited from filing an application for
preconstruction costs under the BLRA.

However, in repealing the BLRA, the General Assembly simultaneously enacted
section 58-34-40 of the South Carolina Code (Supp. 2020). That statute provides,
in relevant part, that any provision in the Code related to general ratemaking
applications,

including, but not limited to, [s]ection 58-27-870(B), [is] suspended
for purposes of the utility rates provided for by this chapter [dealing
with the continuation of rate increases imposed under the BLRA] and
for any [] matters related to V.C. Summer Nuclear Reactor Units 2
and 3 at Jenkinsville, South Carolina, pending before the [PSC] on or
after the effective date of this chapter.
Id. (emphasis added). Thus, it appears the General Assembly contemplated the
possibility that, even absent the BLRA, a utility could file a general ratemaking
application and recover its past costs actually spent in pursuit of constructing a new
nuclear plant. The General Assembly clearly acted to close this "loophole"—if it
was, in fact, one—by prohibiting a general ratemaking application related to post-
construction costs for the V.C. Summer project. Notably, the General Assembly
did not close this supposed loophole for any other nuclear-construction project
besides V.C. Summer.

Therefore, impliedly, DEC was permitted to recover its actual, out-of-pocket costs
related to the Lee Nuclear Project. However, as was the case before the BLRA
was enacted, DEC's expenditures were subject to a prudency evaluation before any
recovery could be authorized by the PSC. Here, ORS agreed with DEC that the
expenses were prudently incurred in pursuit of the Lee Nuclear Project before
various factors changed and made abandonment of the project the most beneficial
option for ratepayers, and the PSC accepted that view of the facts.27 As the PSC
noted in its initial order, SCEUC did not present any evidence to the contrary, nor
did any other party. As a result, we find the PSC's decision is supported by
substantial evidence, not arbitrary or capricious, and not controlled by an error of
law. We therefore affirm.

VII.

While these consolidated cases are undoubtedly complex, the PSC thoroughly and
thoughtfully considered each of the issues on appeal and rendered decisions that
were not arbitrary or capricious, not clearly erroneous, and not controlled by an
error of law. As a result, we affirm the PSC's decisions in full.

AFFIRMED.

HEARN, JAMES, JJ., and Acting Justice John D. Geathers, concur.
FEW, J., concurring in part and dissenting in part in a separate
opinion.

27
Moreover, DEC submitted quarterly reports to the PSC and ORS between 2011
and 2018, detailing its expenditures and AFUDC costs. These amounts were not a
surprise, and, presumably, had DEC been acting imprudently, ORS would have
stepped in long before DEC filed its 2018 ratemaking application.
JUSTICE FEW: I agree with the majority on its disposition of Duke's claims for
litigation costs, carrying costs, and costs associated with the Lee Nuclear Project. I
concur, therefore, in Sections IV, V, and VI of the majority opinion. I disagree,
however, with the majority's rationale in Section III of the opinion relating to Duke's
claim for environmental compliance costs associated with North Carolina law. On
that point, I believe the Public Service Commission made an arbitrary decision and,
thus, committed an error of law. As to Section III of the opinion, therefore, I
respectfully dissent.

The central tenet of law governing the rate-setting responsibilities of a utility
commission such as the Public Service Commission of South Carolina is that a utility
is entitled to have included in its rate base those capital costs and operating expenses
it reasonably incurred to enable the utility to provide the services for which the
ratepayer must pay. Originally, and in most instances today, the utility's
management team made prospective strategic business decisions on how to use
capital and whether to incur expenses. These decisions are deemed by law to have
been made on the basis of sound business judgment, and thus courts presume the
decisions were reasonable. So long as the presumption is not rebutted, the utility
commission is obligated to permit the costs of capital and expenses incurred as a
result of those prospective decisions to be included in the utility's rate base. By
permitting the utility to recover a fair rate of return on all costs reasonably incurred,
the utility commission complies with the Fifth Amendment. See generally S. Bell
Tel. & Tel. Co. v. Pub. Serv. Comm'n, 270 S.C. 590, 595-98, 244 S.E.2d 278, 281-
82 (1978) (quoting Bluefield Water Works & Improvement Co. v. Pub. Serv. Comm'n
of W. Va., 262 U.S. 679, 692-93, 43 S. Ct. 675, 679, 67 L.Ed. 1176, 1182-83
(1923); Fed. Power Comm'n v. Hope Nat. Gas Co., 320 U.S. 591, 602-03, 64 S. Ct.
281, 287-88, 88 L.Ed. 333, 345 (1944)).

This issue, however, is not about prospective business decisions Duke made to spend
money. Rather, this issue is about decisions Duke made not to spend money,
resulting in retrospective legal requirements that Duke now spend money. In the
course of its coal ash disposal practices over the years leading up to the mandatory
provisions of state and federal law the majority outlines so clearly, Duke was
allowed to include in its rate base expenses it incurred in disposing coal ash. Duke's
decisions to incur those expenses necessarily included the decision not to incur the
additional expense of more environmentally sound coal ash disposal practices. The
question of whether the expenses Duke has now incurred to comply with state and
federal law should be included in Duke's rate base for South Carolina customers
should nevertheless turn on the same point—reasonableness. If Duke acted
reasonably in not taking extra precautions to control the environmental
consequences of its coal ash, then, when the state and federal governments came
along later and required remediation, Duke should be allowed to have the new
expenses included in its rate base. This is, in fact, the way the North Carolina
Utilities Commission appears to have handled the question, and the way the majority
handled the litigation costs in this case.

In my opinion, disallowing the cost of complying with another state's environmental
laws simply because the requirements of that law were imposed by the other state's
legislature is arbitrary and, therefore, erroneous. The PSC and the majority support
their conclusion on several bases, each of which I find unpersuasive. First, the PSC
suggested that Duke "caused" CAMA by its misconduct at Dan River. I have no
doubt the Dan River disaster is what brought the need for coal ash disposal reform
to the attention of members of the North Carolina General Assembly. It is wrong,
however, to suggest that CAMA—or any other statute—could be imposed to punish
an individual person or company. While Dan River certainly spurred the General
Assembly to action, the ultimate legislation was designed to clean up and protect the
environment of North Carolina, not to punish a corporate bad actor. To the extent
the PSC denied Duke these costs because it believed Duke "caused" CAMA, the
PSC's decision was arbitrary.

Second, the majority states "there is no evidence of any direct benefit to South
Carolinians that stems from . . . CAMA." In my opinion, there is some evidence of
a direct benefit to South Carolinians. This was not a point on which the parties
presented extensive evidence. However, for several of the North Carolina plants
where its law required remediation, the stringent CAMA requirements clearly and
directly benefit citizens of South Carolina. For example, Duke's Cliffside plant on
the Broad River and its Riverbend and Allen plants on the Catawba River are so
close to where those rivers flow into South Carolina as to provide almost no
downstream benefit to North Carolina residents and almost all downstream benefits
to South Carolina residents.28 I accept the majority's response to my point regarding
the Cliffside and Allen plants. However, to say "there is no evidence of any direct
benefit to South Carolinians that stems from coal ash remediation costs required by
North Carolina's CAMA scheme" is not correct. To exclude those costs from Duke's
rate base on the basis of such an incorrect premise is arbitrary.

28
These sites and the coal ash storage basins located there appear to be from three
to fifteen miles upriver from the South Carolina line.
Third, the majority relies on the "cost causation principle." In my view, that reliance
is misplaced in this case. The general principle to which "cost causation" is an
exception is that "[w]hen a system is integrated, any system enhancements are
presumed to benefit the entire system." N. Va. Elec. Coop., Inc. v. Fed. Energy
Regul. Comm'n, 945 F.3d 1201, 1207 (D.C. Cir. 2019) (alteration in original)
(quoting W. Mass. Elec. Co. v. F.E.R.C., 165 F.3d 922, 927 (D.C. Cir. 1999)).
Duke's electric grid serving North and South Carolina is clearly integrated. Any cost
Duke reasonably incurred to build its integrated grid—including the cost of
constructing and operating coal-fired power plants—must be included in Duke's rate
base. As the majority explains, coal combustion residue (coal ash) is a necessary
byproduct of burning coal to generate electricity. Safely storing the coal ash is also
a necessary part of operating a coal-fired power plant. As history demonstrates, the
initial storage of the coal ash does not end the storage process. The coal ash must
be monitored and contained over time. When the power plant closes, the disposal
site must be closed. Therefore, the costs associated with remediating and closing
coal ash storage at Duke's North Carolina facilities are part of the cost of operating
the plant, and a necessary part of Duke's integrated electric grid. None of the North
Carolina coal-fired plants could even have begun operations without considering the
cost of coal ash storage, including not only how the storage would be maintained
over time, but also how the storage would ultimately be closed. Thus, the additional
costs imposed by CAMA are part of the originally-contemplated capital and expense
costs for the plant itself. If the additional costs were reasonably incurred, then Duke
is entitled to have them included in its rate base.

Perhaps the majority is correct Duke chose not to pursue the issue I raise, and thus,
technically, the issue is not preserved for our review. Perhaps the majority is correct
Duke did so because the PSC awarded all of Duke's claimed costs from Cliffside and
Allen. Perhaps Duke did so because it could not defend its coal ash disposal
practices over the years, and the inquiry I contend the law required the PSC to make
would have left Duke in a worse position than where it stands today. Whatever the
reason, the central tenet of law governing the PSC's rate-setting responsibilities
requires the PSC to determine whether the utility acted reasonably in making
decisions on how to use capital and whether to incur expenses. Even in these
retrospective examinations of the utility's behavior, the central question remains
reasonableness.

In this case, the question should not have been which state imposed which
remediation requirement. The PSC should have conducted a fact-finding proceeding
to determine whether Duke acted reasonably in not doing more to safely dispose of
coal ash in the years leading up to the federal CCR Rule. To the extent Duke acted
unreasonably in not taking steps to avoid the environmental consequences of its coal
ash disposal, any of the compliance costs retroactively imposed on Duke by
applicable law should be disallowed from Duke's rate base. However, where Duke
acted reasonably in not preventing the underlying condition now sought to be
remediated, the retroactively imposed cost to remediate that condition should be
included in Duke's rate base.

For these reasons, I respectfully dissent as to Section III of the majority opinion.