Expenses called “Appalling and Offensive”
Columbia, SC—With many South Carolinians still struggling to simply put food on the table and small businesses trying to keep their doors open, South Carolina Electric & Gas (SCE&G) wants its 668,000 customers to pay an average 6.6% increase in electricity rates. SCE&G justifies its need for an increase in revenue in part because of “Zumba and body sculpt classes” for its employees as well as dinner and drinks at an expensive restaurant for SCANA Board members. This public information was released today by the South Carolina Small Business Chamber of Commerce that opposes the rate increase.
On June 29, 2012, SCE&G filed for a general rate hike that calls for residential customers to pay 7.35% more for electricity while businesses would pay 4.19% to 6% higher rates. The new rates on their own would bring in about an additional $151 million to the company. SCANA, parent company of SCE&G, reported a 29% increase in earnings to $72 million in the second quarter this year compared to last year.
The documents provided to the S.C. Office of Regulatory Staff (ORS) to justify the rate hike show that SCE&G paid nearly $3200 for 166 “Zumba and body sculp” classes for employees from a private trainer in 2011. This company expense was just part of the $1.4 million in unallowable expenses found by the ORS. SCE&G also wants its customers to pick up the tab for dinners and drinks at Ruth’s Chris Steak House in Columbia for the SCANA Board members. Those bills showed $593 of liquor at a January 2011 dinner and a $643 alcohol tab at the same restaurant in August 2011. Included in those drink charges were four Macallan 25 Scotches at $50 each and five $56-bottles of wine.
“Asking the SCE&G customers to pay for Zumba classes and alcohol is appalling and offensive,” said Frank Knapp, Jr., president and CEO of the South Carolina Small Business Chamber of Commerce. Mr. Knapp has formerly intervened in the SCE&G rate case as a private customer as he has done four times before.
“While these costs are small compared to the total revenue sought by SCE&G,” Knapp continued, “the company knows that they are absolutely unallowable expenses to be included in a rate case. Several years ago SCE&G tried to include the cost of massages and ORS rightfully threw that out.”
“Intentionally including these costs to justify a rate hike demonstrates a blind-eye toward their customers’ economic struggles,” said Knapp. “Just going out for a family dinner is out of reach for many SCE&G customers because they have so many other bills they must pay, like the electric bill, which for SCE&G residential customers is already 22% higher than Duke customers and 28% more than Progress Energy customers.”
Knapp added, “Every unnecessary dollar paid by a residential customer to SCE&G is a dollar that won’t be spent in a local small business to help grow the economy. And every unnecessary dollar paid by a small business to SCE&G is a dollar that can’t be used for paying higher wages to workers. This issue is not just about keeping SCE&G financially healthy. It’s about how to do that without hurting the state’s economy by asking consumers to pay more than is absolutely necessary.”
At the rate hearing set for November 27, Mr. Knapp will also challenge SCE&G’s rate hike request for a much higher Return on Equity (ROE) than the rate Duke Power currently has. “SCANA is a profitable company because our regulators make sure that it is. Wall Street doesn’t need anywhere near the 10.95% ROE that SCE&G is asking for in order to entice it to buy the company’s paper. Wouldn’t we all like to get even 10% return on our investments,” asked Mr. Knapp.
(Supporting documents and Mr. Knapp’s full statement can be found at www.scsbc.org under issues.)