June 21, 2013
By Bill Poovey | GSA Business
The president of the S.C. Small Business Chamber of Commerce said before the first public hearing on Duke Energy’s request for a third rate increase since 2010 that the request is “not justified and particularly not justified for small businesses.”
Frank Knapp Jr. has filed as an intervenor in the rate case.
“We are opposing the proposed rate hike,” said Knapp, whose Columbia-based group has more than 5,000 members. “There is no justification for it. The rate of return on equity is way too high.”
The utility is seeking to increase rates by an average of 15.1% to boost revenues by $221 million annually.
The request would increase rates by an average 16.3% for residential customers, 14% for commercial customers and 14.4% for industrial users. Duke Energy’s rates in South Carolina are among the lowest in the Southeast, but rates are determined in part by utilities’ profit margins, or return on equity. Duke is requesting a return on equity of 11.25%, up from 10.5%. The PSC will determine whether to allow that increased profit margin and decide what the 540,000 retail customers in the state can afford.
Ryan Mosier, a spokesman for the utility in Greenville, said previously that the rate increase application is based on the actual costs of new power plants and upgrades, as well as the 11.25% return on equity rate recommended by outside consultants. He said that maximum profit margin is a limit, not a guarantee.
“Like any other business, we still must manage our business and costs to achieve a return on our investments,” he said.
The filing for higher rates could start hitting customers’ pocketbooks in the fall. It follows two recent increases for the Charlotte-based utility. In 2010, Duke sought a 7.2% increase, or $104 million, and was allowed a 5.2% increase, or $74 million. In 2012, Duke sought a 14.2% hike to raise annual revenues by $216 million. The PSC approved a 6% increase that added $93 million in new revenues.
Duke wants the extra revenue mainly to provide $673 million for the new Dan River natural gas plant in Eden, N.C.; $236 million for high-efficiency technology at its Cliffside Steam Station in Mooresboro, N.C.; $141 million for safety and security measures at the Oconee Nuclear Station near Seneca; and $135 million for upgrades at the McGuire Nuclear Station in Mecklenburg County, N.C.
Knapp made the comment hours before the S.C. Public Service Commission’s public hearing on the request at Spartanburg Community College, the first in a series of hearings also set in Greenville, Anderson and Columbia.
The PSC takes up the increase in Columbia starting July 31.
The schedule for the remaining hearings that start at 6 p.m.:
June 24, Greenville County Council Chambers, 301 University Ridge, Suite 2400, Greenville.
June 27, Anderson Civic Center, Ballrooms A&B, 3027 MLK Jr. Blvd., Anderson.
Aug. 1, Public Service Commission, 101 Executive Center Drive, Columbia.