Opinion: Dominion’s ad campaign clouds coming PSC decision

Statehouse Report
August 10, 2018

By Frank Knapp, special to Statehouse Report

It’s good news for consumers that a federal judge last week ruled the state Public Service Commission (PSC) can temporarily reduce utility rates by 15 percent by S.C. Electric & Gas Company ratepayers following the failed construction of nuclear plants in Fairfield County.

But that ruling isn’t as important as what happens next — the legislatively-mandated ruling by the PSC in December about any permanent rollback of SCE&G’s rates, a ruling that has consequences for its suitor, Dominion Energy.

Dominion has flooded TV and radio with ads.  The apparent intent is to convince the public that its offer to acquire SCANA/SCE&G is the best deal for ratepayers to permanently resolve the financial crisis of paying for the abandoned nuclear plants in Fairfield County.

SCE&G ratepayers have seen their electric bills increased by 18 percent since 2009 and collectively have shelled out over $2 billion in higher utility rates because of this nuclear debacle.

According to the ads, Dominion promises to give the average family a check for $1,000 as a rebate for past SCE&G rate hikes associated with the nuclear plant construction.  In addition, Dominion promises to rollback electric rates by 5 percent, not counting an additional 2 percent from corporate tax cut savings.

However, this “generous” offer is available only if the PSC approves Dominion’s purchase of SCANA/SCE&G and allows the Virginia-based utility to continue charging for much of the abandoned nuclear plant construction debt.

That’s what Dominion’s multimillion-dollar marketing campaign is now about—influencing the seven Commissioners of the PSC.

In November, the PSC is scheduled to hold one hearing to combine two issues—how much SCE&G’s electric rates should be permanently rolled back and whether Dominion should be approved for acquiring SCANA/SCE&G.

Dominion’s calculation is that the PSC won’t want to deprive the SCE&G customers of its “generous” cash-back and rate rollback offer if it is popular with the public.  With this concern on their minds, the Commissioners might be more reluctant to roll back rates too much resulting in Dominion dropping its “generous” offer to take over SCANA/SCE&G.

But exactly how “generous” is Dominion’s offer?

Most ratepayers think that they are average and would receive the $1,000 Dominion check.  But depending on how “average” is calculated, most families would get less than the $1,000, possibly far less.  Dominion hopes your knowledge of math isn’t that great.

Dominion acknowledges that $1 billion of the $1.3 billion it will use to write those customer checks is coming from a settlement with Toshiba, money that was already to be used to pay back ratepayers.  How generous is it to take credit for giving the customers money they were already supposed to receive?

Thousands of SCE&G customers will not get any check because Dominion says they would not be “eligible.”  An “eligible” customer, according to Dominion, is one who is an SCE&G ratepayer as of the date Dominion takes over SCANA/SCE&G (the end of 2018 or early 2019) and who had SCE&G electricity service in 2016.  So, if a ratepayer has had SCE&G service but will not have that service when Dominion officially buys SCANA/SCE&G, there will be no check.  If a ratepayer continues with SCE&G service into 2019 but was not an SCE&G customer in 2016, there will be no check.

It also turns out that Dominion’s $1,000 cash-back offer was only two-thirds of what it was willing to do.  According to state legislators, the utility was willing to increase the offer to $1,530 for an average customer rebate if it got concessions from the General Assembly.  Legislators refused to be blackmailed and Dominion took back the extra $530 per average family offer.

Then there is Dominion’s offer of a 7 percent rollback in electric rates.  This is less than half of the 15 percent temporary rollback ordered by the Legislature, approved by the PSC and refused to be blocked by a judge.

The same logic that went into the decision for this 15 percent temporary rate reduction will also be used to pursue a PSC order for a permanent 15 percent or more rate rollback.

But that PSC decision is in jeopardy as long the Dominion proposal to acquire SCANA/SCE&G is on the same PSC’s docket as the SCE&G rate rollback.

The ratepayers deserve the undivided and Dominion-free attention of the PSC when it rules on SCE&G rates.  The “generous” Dominion offer should not influence this critically important decision by the Commissioners.

The PSC rate reduction hearing and ruling should thus come first without Dominion’s input or even sitting at the table to put pressure on the Commissioners.  Only then should the PSC hold a hearing on Dominion’s desire to gobble up SCANA/SCE&G.

Knapp is the president and CEO of the S.C. Small Business Chamber of Commerce.  You can contact him at fknapp@scsbc.org

MY TURN, Knapp: Dominion’s ad campaign clouds coming PSC decision


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