Regulated utility monopolies are politically rigged to put ratepayers at risk.

That’s how SC Electric & Gas over-charged its 725,000 ratepayers $2 billion in a doomed nuclear power project.

This analysis comes from energy adviser Jim Clarkson of Resource Supply Management in Columbia.

Clarkson advises manufacturers and other high electricity users how to control their power costs.

In his advice to clients this week he wrote that the only way to make utilities efficient and accountable to ratepayers is to end monopoly regulation and let competition set rates.

With no competition but captive ratepayers, utility executives lied to state regulators to win a series of wasteful rate increases.

“Government creates all monopolies,” he wrote.

“There was never any real justification for the regulation of the electric utility business. The existence of utility regulation is a triumph of political entrepreneurship by utility companies to use the power of state government to gain dominance over their customers, to eliminate their more efficient competitors and to obtain recovery on their bad investments.

“Those ends remain the goal of regulation today.”

He wrote that in the earlier free-market era:

• Utilities developed improvements to under-price competitors with cheaper electricity generation.

• Their rivals sought guaranteed cost recovery on their obsolete assets and turned to political means.

• They convinced lawmakers to adopt a system of political energy distribution that costs more than needed to provide service.

• That system produced far higher profits than possible in a competitive market.

• Those profits rewarded utility executives and their investors, led to inefficient operations, provided recovery on inflated investments, shifted costs to ratepayers and money to their unregulated affiliates, and gave them the means to protect their monopolies rather than to satisfy customers.

• This regulatory regime has created politically powerful but ineffective management, weakened work ethic, created suspect accounting systems and ignored feedback from consumers.

• Sheltered from competition, utilities operate to satisfy politicians, investors and their executives at the expense of ratepayers they are supposed to serve.

• Cost-plus, rate-of-return regulation corrupts operators and investing standards.

“Utility regulation is an unholy union of vested economic privilege and authoritarian ideology that spawns the Rosemary’s baby of cronyism,” he wrote.

Holding companies for regulated utilities own unregulated companies that prosper by shifting costs to regulated sister companies.

• Lucrative projects are done for unregulated affiliates, and risky projects such as SCE&G’s nuclear project are borne by the regulated utility and its ratepayers.

“When we see nuclear plants, efficiency programs and green energy development being done under the regulated company, we know these are financial turkeys,” Clarkson wrote.