Public has power in SCE&G hike

November 27, 2012

The State

By Roddie Burris

Public pressure played a role in persuading South Carolina Electric & Gas Co. to moderate its pending price hike for electricity.

A couple of technology-driven tele-town halls reached roughly 35,000 people in the weeks preceding public hearings on the rate increase case.

And a billboard and media advertising campaign combined with robocalls and a social media campaign that organizers say registered 3 million imprints on Facebook appears to have made the difference.
SCE&G officials began making their case Monday for an electric rate increase to the S.C. Public Service Commission. A public hearing for the request – which would raise the average bill by about $31 a year instead of $80 in the original request is set for tonight at 101 Executive Center Dr. in Columbia.

The Public Service Commission could accept the lower rate increase after its meeting today. If it does, it would be a small victory for the little guy, some say.

“The public still has the power, but you’ve got to be able to get out there and express your opinion,” said Patrick J. Cobb, spokesman for AARP South Carolina, a major player in helping secure the reduction in the rate increase request.

After two public hearings over the past month, four of six interveners in the rate case entered a memorandum of understanding last week in which SCE&G lowered the amount it was asking for to 4.23 percent, or $97 million, from 6.6 percent, or $152 million.

An accompanying SCE&G request in the order seeks to further lower that rate increase by 2.85 percent more, reflecting lower natural gas fuel costs the company has incurred this year, settling the net requested rate increase at 1.38 percent, or $32 million.

The new agreement would leave SCE&G customers using an average 1,000 kilowatt hours of electricity a month with a $2.59 monthly bill increase, or about $31 a year. The initial request would have cost those same customers a $6.67-a-month bill increase, or about $80 more a year.

Working out a compromise ahead of a PSC hearing is not unusual, SCE&G says.

“Historically, the Public Service Commission has been supportive of the process that allows parties in a rate proceeding to work through any differences toward an end that all the parties can agree is reasonable,” said Eric Boomhower, SCE&G spokesman.

The Department of Navy and a conservation group called South Carolina Energy Users Committee both stepped forward to oppose the utility’s initial $152 million, 6.6 percent electric rate increase request. Other players, including a couple with widespread name recognition such as Wal-Mart, Sam’s and cable provider Time Warner Inc. also signed on to publicly oppose the rate hike.

But it was AARP South Carolina, the American Association of Retired Persons, that took on the role of robust consumer advocate in negotiations to derail, or at least seriously trim back, SCE&G’s request, according to parties involved in talks that led to an agreement for the significantly smaller increase request.

The apparent grounds for the negotiated deal? South Carolina seniors and other ratepayers insisted they couldn’t afford the additional $152 million payout.

The publicity campaign, dubbed “Pull the Plug on Higher Utility Costs,” included robocalls and was centered in 23 S.C. counties where the SCE&G rate increase would apply, and AARP members would be affected, Cobb said.

In the tele-town halls, AARP members and others joined on simultaneous teleconference calls to hear the nuts and bolts of SCE&G’s request, ask questions and voice their opinions, and were urged to turn out to the upcoming public hearings.

“It was pushing heavy content out there,” Cobb said of the effort. “(Then) We basically let them alone to become active in the issue of either writing a letter to the Public Service Commission or attend a hearing or testify at one of the hearings, because we understand that when folks make a passionate plea in front of a public body … they’re more attuned to listen.”

Dukes Scott, S.C. Office of Regulatory Staff executive director and a 30-year veteran in administering public services in the state, echoed the importance of the public’s role.

“They (the AARP) were very, very helpful,” Scott said. “Without them, I don’t think we would have gotten this good an agreement.”

Advocates requested several public hearings be held around the state ahead of the decisive Commission meeting scheduled this week, Cobb said, though only three such hearings were granted.

The state Office of Regulatory Staff, created in 2004 to protect the public in issues involving state regulated services such as electricity, natural gas, telecommunications and railroad regulation, also is charged with forging agreements where divided parties such as the public and the utilities disagree.

The agency files the action it thinks is appropriate regarding rate increases and other issues, then outside parties such as Wal-Mart, AARP and others choose whether to sign on.

“It’s still important, and I can’t emphasis it enough, that people come to the night hearing (tonight in Columbia) because some people won’t like the agreement because they want no increase at all,” Scott said.

Testimony in the other public hearings included comments from people who said their ability to buy food and medicine would be negatively impacted by the initial SCE&G proposal. Industry officials testified also – one company noting that it does business both with SCE&G and in the Upstate with Charlotte-based Duke Power Co., but that Duke’s rates are 40 percent lower
than SCE&G’s.

“The company, I assume, goes through a process of ‘Do I roll the dice and go before the commission without an agreement? And sometimes you come to the conclusion that it’s better to get a settlement, and certainly not have as adversarial a proceeding before commission, which may give some comfort that you have the support of (the opposing parties).”

Scott applauded AARP’s efforts and those of Frank Knapp, who intervened in the rate case as a private citizen. Knapp, who also is president and CEO of the S.C. Small Business Chamber of Commerce, mobilized and spearheaded media releases against the rate increase and called SCE&G out for including in its rate increase several improper expenditures such as for liquor and high-end restaurant bills.

SCE&G subsequently agreed improper expenditures had been included in the rate hike request but also stood by the costs it said it incurred meeting federal reliability and regulatory compliance mandates, such as installing air scrubbers at its plants to meet federal emission standards.

Like Scott, of the Office of Regulatory Staff, Knapp also criticized SCE&G for asking too high a return on equity in the request, initially set at 10.95 percent. In the later agreement, the cost to attract investment capital was lowered to 10.25 percent.

“I think it’s very clear it’s all the negative publicity they’re getting,” that caused SCE&G to compromise, said Knapp. “From my experience, I know that that’s what moves them. I think the company doesn’t like negative publicity, so it’s how much negativity are they willing to put up with?”

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