Published May 21, 2004
Editorial in The Post and Courier
The state Senate should be wary of a bill that will enable easier rate hikes for natural gas companies that are regulated by the state Public Service Commission. That will almost certainly make them more frequent and likely to add to their cumulative impact.
State Consumer Advocate Elliot Elam describes the proposal as “a solution to a problem that doesn’t exist,” noting that the two gas utilities that operate in South Carolina already benefit from provisions for automatic rate adjustments caused by fluctuations in the bulk cost of natural gas and the level of demand caused by winter weather.
The House bill, approved in April, is prefaced with an explanation about the difficulties created for the industry by the current requirement to petition the PSC for rate hikes, bringing into play what is described as a costly and cumbersome rate-making procedure.
“Proceedings under existing provisions of law tend to create more perceived economic hardship for consumers and engender more public controversy than would smaller and more regular rate adjustments spread over a number of years,” the bill states. Mr. Elam, however, estimates the cost of rate proceedings represents only 0.0002 percent of customer rates.
The proposal would have the industry submit data related to rate hike requests for review by the PSC staff, which would make a recommendation to the commission. It would require the state to conduct “nearly continuous examination” of industry data, MR. Elam says. Commissioner Mignon Clyburn tells us that the bill would require the PSC to hire two staffers to deal with the routine rate hike requests.
The bill is opposed by the S.C. Small Business Chamber of Commerce, representing some 10,000 merchants. Chamber President Frank Knapp said its regulations aren’t adequate to ensure that consumers get a fair shake.
The current rate-making procedure provides a public forum for the industry to make its case, and for consumer advocates and other opponents to counter them.
The PSC has been criticized in the past for being too cozy with regulated utilities. Reform measures to improve consumer protection and commission credibility enacted this year shouldn’t be undercut by legislation that eases rate increases for a regulated industry not subject to regular market force.
The Legislature should ensure that consumers are protected, and that the voices of their advocates aren’t muted through a streamlined rate-making process primarily serving the convenience of the industry.