Official Newsletter of The SC Small Business Chamber of Commerce 12/5/02

Official Newsletter of The SC Small Business Chamber of Commerce 12/5/02

Since the legislative session ended, The SC Small Business Chamber of Commerce has been very busy on some key issues—small group health insurance, workforce training and SCE&G’s electric rate increase.  Just recently another issue has surfaced that will increase costs next year for small businesses–an unemployment insurance surcharge.  Below are summaries of our activities on these issues.  In addition to these efforts, we have been working on increasing membership and will have some very good news in the near future.

As the Small Business Chamber prepares for the upcoming legislative session, we hope you will look out for our e-mailed legislative alerts and other information that will enable you to be a part of our grass roots lobbying team.  Your active participation is not only appreciated, it is an essential part of our ability to influence the governmental process.

One last note, in January one member of our Board of Directors, Senator Andre Bauer, will be taking the oath of office as our Lieutenant Governor.  We wish him the best in his new leadership role in our state.

The Small Business Chamber wishes you a very happy and safe holiday season.

Small Group Health Insurance

The Small Business Chamber continues to assist the SC Department of Insurance with a $1.1 million federal grant to analyze the small group health insurance and uninsured issues.  Our chairman, Tim Wilkes, serves on the Policy Advisory Committee for this grant and Executive Director Frank Knapp is part of the small working group responsible for the project’s implementation.

Small business owner focus groups will be conducted shortly and a statewide telephone survey will follow after that.  A final report along with policy recommendations to make small group health insurance more affordable and accessible will hopefully be ready by the summer of 2003.  However in the mean time, the Small Business Chamber is working with several Clemson University professors on developing a significant piece of legislation on small group health insurance that will hopefully focus the SC Legislature’s attention on this critical issue.

Workforce Training

Establishing a well-trained workforce for South Carolina continues to be a top priority for the Small Business Chamber.  Our efforts during the last legislative session helped secure the allocation of lottery funding for technical college tuition assistance. This academic year, this new funding is covering 75% of the tuition for qualified technical college students.

The Small Business Chamber has been working with the SC Registered Apprenticeship Roundtable to promote the use of Registered Apprenticeships as an important vehicle for businesses to develop their own trained and technically skilled workers.  Our surrounding sister states have been using this method successfully for years to achieve this objective, creating a strong, documented workforce with portable skills credentials.

On October 28th, the Small Business Chamber coordinated a presentation to the State Workforce Investment Board on a proposed Registered Apprenticeship delivery system demonstration project. As a result of that presentation, state agencies concerned with economic development have been meeting with leaders of the business community, including the Small Business Chamber, to determine the future course of action regarding Registered Apprenticeships.

SCE&G Rate Increase

SCE&G, which serves 24 counties in the state, presented its case to the S.C. Public Service Commission for a 14% electric rate increase on small businesses during a five-day hearing in November. The SC Small Business Chamber of Commerce opposes this rate hike and officially intervened in the rate hearing enabling it to cross examine and present witnesses.  The grocery store chains, facing a 12% rate increase, were represented by the SC Merchants Association and the SC Energy Users Committee represented the industrial sector, targeted for only a 5% increase.  The Consumer Advocates Office also was a party of record questioning the 7% increase on residential customers.

SCE&G justified its need for $104.7 million a year in additional revenue by citing costs associated with two new power plants, one still under construction in Jasper County, and environmental upgrades.  The increased revenue would supposedly allow for a 12.5% return on common equity to attract investors from Wall Street in order to finance the construction and operation needs of SCE&G.

In spite of small businesses representing the largest class of electric users (64,059) and producing the largest increase in new revenue for the company under the proposed rate hike, testimony from SCE&G officials showed that the company has done little to help small businesses.  SCE&G does not have an economic development effort for small businesses as it does for big business.  SCE&G does not have different rate plans available to small businesses to encourage energy use patterns that will save them money and SCE&G power as they do for medium and big businesses.  SCE&G certainly doesn’t negotiate rates with small businesses as they do for big business. SCE&G has used their public policy goal of attracting industry to the state as a reason to keep electric rates down for big businesses.  And finally, SCE&G did not try to do any assessment of the impact of a 14% rate increase on small businesses in their decision-making process.

Expert witnesses testified that a 12.5% rate of return on common equity was not needed to attract investors.  A 10.5% rate of return would be sufficient.  These and other recommendations offered would bring the new revenue need for SCE&G down to only $32 million annually, one witness said.  Such a reduction would proportionally reduce the rate increases requested for all classes by approximately 70%.

Tim Wilkes, chairman of The SC Small Business Chamber of Commerce, testified on the fifth and final day.  Wilkes called the 14% rate hike on small businesses unfair, untimely and equivalent to a tax increase.  He pointed out that while SCE&G has indicated that none of their management has or will experience a cut in pay in order to tighten the company’s belt, a 14% rate increase will come out of the small business owner’s pocket and put them in a position of not making payroll.

Wilkes said that he did not have faith in SCE&G’s calculations of the cost to serve small businesses. Citing the growth in the small business community, he wondered why small businesses were being punished for keeping our economy afloat during this recession. Mr. Wilkes said that he certainly couldn’t see how a rate increase “sucking $100 million out of our economy and sending it up to Wall Street to pay interest to investors was going to do anything but hurt our economy here.”

Mr. Wilkes called SCE&G’s decision to start construction of the Jasper County plant, which accounts for over 1/3rd of the company’s new revenue needs, a bad decision in this poor economy.  SCE&G had the option of simply buying power to meet peak demand instead of building at this time.  Now, Wilkes said, SCE&G wants the consumers to pay for their business decision with a favorable ruling by the PSC.

The Small Business Chamber will be calling on your help in January to lobby your legislators on this issue. The PSC, whose commissioners are all up for re-election by the General Assembly in 2003, has until February 6, 2003, to rule on this matter.

Unemployment Insurance Surcharge

On December 3rd, The SC Small Business Chamber of Commerce participated in a briefing by the SC Employment Security Commission regarding a severe deficit in the state’s unemployment trust fund.   This situation is due to declining economic conditions and increased unemployment claims.  State law requires that this reserve fund not fall below 2% of total wages in the state.

The unemployment trust fund now stands at reserve ratio of 1.576%.  As a result, starting this January the state will assess a 0.50% surcharge on unemployment insurance paid by every business on each employee as required by law.  Employers will pay an additional $35 per employee for the year.  This surcharge will be reflected in your quarterly payments starting in April.

The Small Business Chamber has requested information from the State that will enable us to determine if small businesses are being treated fairly and equitably in this across the board 0.50% surcharge.  While it is essential that the unemployment trust fund be adequately funded, small businesses need to be assured that their contributions are proportional to their use of the fund.

If you have any questions, please contact us at this e-mail address or call Allen Larson at the Employment Security Commission (803-737-3089).