Opinion: Bill is the wrong path for SC to take to energy security

The State
April 1, 2024

Opinion: Bill is the wrong path for SC to take to energy security

By Frank Knapp Jr.

The dire warning from South Carolina’s public utilities is that the state is in peril — a much bigger energy supply is needed soon to service growth in population and industry.

Regardless of its merits, this message is the shiny object these utilities are using to distract legislators and the public from their ultimate long-term goal of creating a regulatory process that they can control.

That goal would be achieved if a bill, just passed by the S.C. House and now in the Senate, is passed as is. While the centerpiece of the South Carolina Energy Security Act is essentially to greenlight the construction of a big natural gas plant, the 70-plus-page bill does much more than that.

The state’s public utilities have been on a relative losing streak with the S.C. Public Service Commission (PSC), which is responsible for regulating public utilities, as a result of legislative reforms that were put in place following the nuclear construction project that collapsed in the last decade. Dominion Energy and Santee Cooper customers have and will continue to pay billions for that economic disaster.

In response to that debacle, starting in 2018 the legislature elected seven new commissioners to the PSC with diverse backgrounds. The state Consumer Advocate’s Office was given authority to intervene in utility rate hearings on behalf of the consumers. The Office of Regulatory Staff, the workhorse agency that crunches the numbers to tell the PSC if utilities need rate hikes and how much, was relieved of being concern about the financial health of utilities.

None of this was good news for the utilities.

Utilities really make their money from building and owning things that have big price tags, thus justifying the PSC approving rate hikes that come with double-digit profits for the utilities.

However, since 2018 the PSC has dealt numerous blows to the regulated utilities in favor of protecting consumers from unnecessary rate hikes and promoting renewable energy.

What is the utilities’ game plan for turning their fortune?

First, remove the current PSC commissioners and replace them with those friendly to the utilities. According to one House member, the S.C. Energy Security Act seeks to reign in the PSC that he said had “stepped out of line” in its rulings. The bill would terminate the present commissioners, reduce the number of commissioners from seven to three, and increase the pay for the new commissioners. The latter would incentivize utility-friendly people, who hadn’t been interested in the PSC because of the work and pay, to want the job.

Removing commissioners because they were not utility-friendly would send a clear message that the legislature will do the same to new commissioners who buck utility proposals or otherwise don’t bow to the wishes of the legislature.

The bill would also eliminate the role of the one state agency with the sole mission of fighting for the consumers. It would sideline the state consumer advocate from appearing at PSC hearings.

The bill would confuse the key state agency as to its purpose when advising the PSC. It would add to the mission of the Office of Regulatory Staff that it should be concerned about the financial health of the utilities. Balancing the financial interest of the utility against the interest of the consumer would be a balancing dilemma that would benefit the utility.

Since 2002, I and the S.C. Small Business Chamber of Commerce, which I co-founded, have officially intervened in 10 PSC rate hike cases to successfully reduce unnecessary rate increases proposed by utilities.

If these provisions in the S.C. Energy Security Act are adopted, the energy utilities will have their way with the PSC. Those who have been the watchdogs will be gone or neutered. Consumers, residential and businesses of all sizes, will see their energy costs dramatically increase for years to come all in the name of utilities building our energy security.

And utilities will be financially healthy. Very, very healthy.

Frank Knapp Jr. is the president, CEO, and co-founder of the South Carolina Small Business Chamber of Commerce.


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