By Dave L’Heureux, Staff Writer
South Carolina Electric & Gas Co. will lose investors and pay higher interest rates if it cannot raise electric rates next year, a Wall Street expert told state utility regulators Wednesday.
But rate hike opponents disputed the need for higher rates, insisting during the third day of testimony that SCE&G should have avoided large capital projects in the midst of an economic slowdown.
The Columbia-based utility wants to raise electric rates by $105 million, an average of 8.7 percent, to expand its electrical generating capacity, make environmental improvements and pay back bondholders.
The S.C. Public Service Commission is hearing the case all week and will decide by Feb. 6 whether to let SCE&G raise rates.
The Wall Street expert, Thomas Osborne of UBS Warburg, said SCE&G will continue to enjoy investor confidence only if it wins permission to raise rates.
“Inadequate returns will affect SCE&G’s bond rating, raise its costs for debt, and affect its customers for years to come,” said Osborne, who spoke for SCE&G.
Osborne said SCE&G, a subsidiary of SCANA Corp., is well- run and fiscally healthy, but would decline if regulators denied its request for rate increases.
For most of the day Wednesday, however, SCE&G took a pounding from business interests fighting proposed increases.
Joseph Epting, attorney for The SC Small Business Chamber of Commerce, questioned an SCE&G executive about the proposed 14 percent increases for small businesses.
Epting asked SCE&G electric rates supervisor John W. Hendrix why the utility had not sought higher electric rates since its last increase in 1996.
“Don’t you feel your company bears some responsibility for the magnitude of the increase because it waited so long?” asked Epting. “If you had come in here three years ago, you wouldn’t be looking at a 14 percent increase.”
Commissioner Buddy Atkins also questioned Hendrix, claiming SCE&G had presented little evidence to support its rate requests.
“You’re a Fortune 500 company,” Atkins said. “And here I have to try to extract information from you about these rates.”
Hendrix replied that SCE&G had provided all the information behind its rate requests.
Testimony will continue today, as rate hike opponents and commission staffers make their case to regulators.