Lexington County Chronicle
July 7, 2016
By Jerry Bellune
State law guarantees S.C. Electric & Gas a profit each time construction costs rise.
S.C. Small Business Chamber of Commerce President Frank Knapp calls this a “blank check” for SCE&G’s profit.
SCE&G asked state regulators last week to raise its rates 3.06% or $4.44 a month for 1,000 kilowatt hours of electricity.
This will be SCE&G’s 9th rate hike since 2009, for a total 19.94%.
“That will result in its customers paying over $74 million more to the utility in 12 months,” Knapp said.
All of the money does not go to cover higher construction financing costs.
Under state law, SCE&G pockets 10.5% as a Return on Equity, Knapp said.
“If you are thinking that 10.5% is a pretty sweet profit, you are correct.
“The PSC might also think that 10.5% profit is excessive. But it doesn’t matter what you or the PSC thinks,” he said.
Only SCE&G, under the law, can give permission to the PSC to lower the Rate on Equity. This would only happen if SCE&G agrees to a settlement with other parties opposing its rate hike. SCE&G argues that state law was written to protect its customers by requiring the PSC and the Office of Regulatory Staff to oversee construction to ensure it is proceeding prudently.
“By allowing for the recovery of financing costs during construction instead of letting those costs compound,” SCE&G spokesman Eric Boomhower said, “it significantly reduces the costs of the project.
“The ORS had a professional accounting firm perform an independent analysis which affirmed that paying financing costs while the two new nuclear units are being built, as opposed to waiting until they are complete, will save customers approximately $4 billion in rates over the life of the new units.”