Electricity and Gas Regulation

Electricity and Gas Regulation

The South Carolina Small Business Chamber of Commerce (SCSBCC) is recognized as the primary organization fighting on behalf of small businesses on all matters regarding electricity/gas rates and related issues such as net metering that are regulated by the S.C. Public Service Commission.

Since 2002, small businesses in South Carolina have saved tens of millions of dollars on their utility bills because of the intervention of the SCSBCC and its president, Frank Knapp, in the rate making process.

A Chronological Summary of Success

In 2002, SCE&G asked the PSC for a 14% increase in electric rates for small businesses. The Small Business Chamber intervened in the hearing and the PSC trimmed SCE&G’s request to an 8% increase.

In the fall of 2004, SCE&G was again asking the PSC for an electric rate increase that would have yielded an increase of $81 million a year for the company. The SCSBCC president, Frank Knapp, formally intervened in the rate hearing arguing that the size of the rate hike was not justified. The PSC cut SCE&G’s request by about 50% and approved only a 2.53% electric rate increase on small businesses.

In September, 2005, Small Business Chamber president, Frank Knapp, officially intervened in a natural gas rate hike hearing for SCE&G. Mr. Knapp worked with the Office of Regulatory Staff to arrive at a settlement with SCE&G that reduced the proposed hike in natural gas rates by 20%.

In June 2007, SCSBCC president Frank Knapp again intervened to oppose an SCE&G proposed electricity rate increase that would have netted the company a revenue increase of approximately $118 million based on a requested return on equity of 11.75%. The S.C. Office of Regulatory Staff, with the support of the intervenors, hammered out an agreement with the utility that reduced new revenue sought by SCE&G by 35% ($76.9 million new revenue based on only a 10.7% return on equity). The increase for small businesses was thus reduced from a proposed 5.83% to 3.79%.

In February 2008, the President of the Small Business Chamber, Frank Knapp, testified as a witness in the S.C. Public Service Commission’s hearings on Duke Energy’s proposed Save-A-Watt program. Mr. Knapp testified that the program did not provide for easy participation by small businesses in the energy conservation effort so that they could save energy and money yet they were still required to pay higher electric rates.

In April 2008, Mr. Knapp testified again before the PSC on the issue of net metering, a program that allows energy consumers to generate their own energy through renewable sources and sell excess energy back to the power company. Mr. Knapp expressed concern that net metering programs proposed by the power companies have excessive participation charges and too low compensation. Consequently, small businesses would be discouraged from participating. The PSC allowed for the net metering programs submitted by the power companies.

In 2009, SCE&G filed a Demand Side Management proposal with the PSC. Mr. Knapp again personally intervened in the process to insure that small businesses would have as much opportunity as possible to reduce energy consumption through the DSM program since they would be helping to pay for the program in their rates. In 2010, the parties agreed to a settlement that will increase energy savings opportunities for small business. As part of the settlement, Mr. Knapp was appointed to the company’s DSM Advisory Group.

In February of 2010, SCE&G filed for a 9.52% electric rate increase. Mr. Knapp again filed to personally intervene in the process. Prior to going to the Public Service Commission for a hearing, Mr. Knapp along with other intervenors, reached agreements with SCE&G to reduce the proposed increase by about half, 4.88%, and phase in the increase over three years.  Consumer will save almost $97 million.

In June of 2012, SCE&G filed for a 6.6% average electric rate increase. However, the company proposed to advance the anticipated reduction in fuel adjustment charges thus resulting in a net proposed average hike of 3.75%. Mr. Knapp intervened in the rate hearing as an individual. Most of the parties of record and Mr. Knapp reached a settlement with SCE&G that reduced the overall rate hike to 1.38%, a 63% reduction, and saving consumers $54 million. The news was even better for small businesses which would only experience a 0.08% increase in electric rates (96% lower than SCE&G had proposed) and would not see another rate increase for three years.

In March of 2013 Duke Energy filed for an average 15.1% electric rate increase which included a 14% rate hike for small businesses.  The SCSBCC intervened and in subsequent negotiations with Duke, the Office of Regulatory Staff and other intervenors agreed to a 8.16% overall rate increase.  However the settlement included only a 3.42% rate hike spread over two years for small businesses.  This was a 75.6% decrease from the original increase Duke had proposed for small businesses and saving small businesses about $13.5 million on their electric bills.

In 2014 the South Carolina General Assembly passed legislation to encourage solar energy utilization in the state utilities and the public. This act also required that the Public Service Commission determine net metering policy with the input from all interested parties.  Mr. Knapp intervened in this hearing process and was a party to the 2015 settlement that represented a significant victory for solar energy advocates. The agreement assured that net metering customers would be compensated for their generated electricity put onto the grid would be compensated by the utilities at the same rate the customers would pay to purchase the electricity.   Additionally the agreement extended this 1:1 rate for solar generators until 2025 and prohibited utility fees for participating in net metering. The agreement was a major milestone in enabling more residential and commercial building owner to affordably use solar energy for their electricity needs.

Also in 2015, the SCSBCC and AARP-SC called for an independent evaluation of the Base Load Review Act that was passed in 2007 and allowed SCE&G to raise electricity rates annually to pay for the construction financing costs of the two new nuclear reactors in Fairfield County.  From 2008 to 2015, SCE&G has increased electricity rates over 31% with over half of that being due to the Base Load Review Act.  In addition, SCSBCC also asked the South Carolina Legislature to consider financial relief for the SCE&G ratepayers.  Read the statement here.

In 2016, the SCSBCC along with 24 other business organizations from across the nation filed an Amicus Brief in support of the Environmental Protection Agency’s Clean Power Plan which was being challenged in the DC Circuit Court of Appeals.  Mr. Knapp, as co-chair of the American Sustainable Business Council, coordinated the filing of the brief. The SCSBCC supports the Clean Power Plan as an effective government regulation to reduce carbon pollution-caused climate change, which is driving sea level rise that threatens the state’s coastal small business tourism economy.

Also 2016, SCE&G petitioned the Public Service Commission under the Base Load Review Act (BLRA) to increase electricity rates by an overall 3.06% to pay for the construction financing costs associated with constructing two nuclear plants. The utility had already raised rates 7 times under the BLRA for a total of about a 17% increase in rates since 2009. Consumers had already paid about $1.1 billion in additional electricity costs due to the BLRA. SCE&G also petitioned to add $846 million more in construction costs for the nuclear plants. Granting this request would result in the plants, already 3 years behind schedule, being about 41% over budget.

As a result of these two petitions, a new coalition was formed, STOP THE BLANK CHECK, to challenge both the rate increase and the increase construction cost request. Founding members of the coalition included the South Carolina Small Business Chamber of Commerce, the South Carolina League of Women Voters, the South Carolina Sierra Club and the National Association of Social Workers-SC Chapter. In addition, Mr. Knapp personally intervened in the Public Service Commission Docket for the SCE&G additional construction costs.

In September of 2016 the SCSBCC filed an amicus brief with the S.C. Supreme Court in support of a petition by citizen groups. The case concerns the S.C. Public Service Commission’s 2014 approval of Duke Energy’s proposed $650 million natural gas power plant without considering lower cost modifications to the plant’s operation that possibly could save money for ratepayers and reduce environmental impact.