By Kyle Stock, Charleston Post & Courier
October 20, 2004
A leading voice for small-business interests in South Carolina criticized the state Public Service Commission on Tuesday for tentatively signing off on an SCE&G rate hike without giving opponents a chance to fully fight proposed increases in their power bills.
“It is simply inappropriate and it raises the question of why the rush to judgment,” said Frank Knapp Jr., president of the South Carolina Small Business Chamber of Commerce. “All the information is not yet on the table, yet the PSC reaches a settlement? … I think that’s very unusual.”
The staff of the South Carolina PSC filed notice late Monday recommending that state regulators allow South Carolina Electric & Gas to raise power rates overall 3.57 percent next year, a figure arrived at via closed-door negotiations with the utility.
An average monthly residential bill would increase 5.5 percent or to about $93.29.
Business and consumer-interest groups believe the recommended increase is too high. Knapp said the PSC staff betrayed taxpayers by negotiating with the utility before it could hold public hearings on the matter.
PSC said that although such negotiations and settlements are rare in utility rate cases, they are not illegal or unethical.
“It’s an attempt to give some degree of certainty to the proceedings,” said PSC general counsel David Butler. “It doesn’t cuit anything. … No one’s rights are trampled on here.”
SCE&G filed a request with the state in July asking to raise rates 5.7 percent to recoup the cost of building a $450 million power plant in Jasper County that went online May 1. Since that request was filed, PSC commissioners received written testimony from the utility as well as businesses and individuals opposed to the proposed increase. Hearings are scheduled to start Nov. 1, and the agency’s seven elected commissioners will ultimately decide how much SCE&G can charge for its power by the new year.
The tentative settlement that PSC staffers drafted calls for a 3.6 percent overall rate increase, which would net Scana Corp., SCE&G’s parent company, an extra $51.1 million a year. Small companies would see a 2.1 percent rate increase, medium-sized businesses would pay 3.1 percent more, while bills would go up 1.3 percent for the state’s biggest power users, including industrial plants. Overall, the settlement calls for a rate of return that is 37 percent less than SCE&G sought in its July request.
The PSC staff is obliged to present an objective view of rate cases based on the testimony of all parties involved. Most of the groups protesting SCE&G’s requests were surprised to hear that PSC staff had negotiated and made concessions to the utility.
“It’s an unusual case,” said Frank Ellerbe III, a Midlands attorney representing Columbia Energy LLC in its opposition of the rate hike. “Nobody approached us about participating in any settlement procedures.”
Knapp said he “resented” the PSC staff going into negotiations without more parties at the table.
Butler said similar settlements are common in other states. He also said that new rules regarding PSC procedures call for more direct negotiation with companies being reviewed. In January, most of the PSC’s advisory staff will join the Office of Regulatory Staff, a new agency created as part of an overhaul of the PSC that the Legislature signed off on early this year.
Commissioners declined requests for interviews Tuesday. Jeffrey Nelson, acting spokesman for the PSC, said commissioners have started to refrain from publicly commenting on pending rate cases, much as judges do on civil or criminal trials.
The negotiations with SCE&G took a week or two, according to Butler. About half of PSC’s normal staff was involved, because many had already made the switch to the new regulatory office.
SCE&G spokesman Robin Montgomery said the settlement was “a positive step” in the regulatory process.
“It is in the spirit of the laws that have been passed and it certainly encourages the different parties to hold discussions,” Montgomery said Tuesday.
Most of those who plan to argue against the utility in coming weeks said the agreed-upon increases are too big.
Carrie Simmons, the mayor of Denmark, a town near Orangeburg, is one of 36 individuals on the list planning to raise their objections. She said many of her 3,000 or so constituents regularly have their power shut off because they can’t pay the bills.
“It’s an everyday occurrence,” Simmons said. “I’m seeing a situation where our citizens are going to be suffering even more than they are now.”
The list of those contesting the increase also includes Wal-Mart, SMI Steel, the South Carolina Department of Consumer Affairs and the Department of the Navy.
Elliott Elam, the state consumer advocate, does not think PSC employees did anything wrong in negotiating a deal with SCE&G. But he said the provisional settlement gives SCE&G shareholders too big a break and is unfair to the average resident.
“There’s a long way between our number and the number in that settlement,” Elam said. “Percentage-wise, I don’t know if we’ve ever been this far apart from a company in a rate case.”
Elam was a major voice of dissent in the fall of 2002 when SCE&G got permission to raise electric rates by 5.8 percent overall.
Scana Corp. has 577,000 retail and wholesale electric customers in South Carolina. The company also sells natural gas to more than 1 million customers in South Carolina, North Carolina and Georgia.