By Dave L’Heureux, Staff Writer
Supermarkets could raise the price of groceries to offset electric power increases by South Carolina Electric & Gas Co. if rate hikes are approved by regulators, industry officials said Friday.
A Bi-Lo executive told state utility regulators higher rates would cost Bi-Lo more than $500,000 a year for electricity in the 34 stores that SCE&G serves
“It’ll cost us $1,100 more per store a month,” Chris Schell, Bi-Lo’s construction and energy manager, told the S.C. Public Service Commission. “We’ll have to sell a lot more groceries.”
Friday’s testimony wrapped up five days of presentations before the commission, which must decide by Feb. 6 on SCE&G’s request.
SCE&G, a subsidiary of SCANA Corp., wants to raise electric rates an average of nearly 9 percent, or $105 million per year, by early 2003. Small and medium-sized business rates could see double-digit increases.
It also seeks a 12.5 percent return on common equity, or profit. The margin is now less than 9 percent.
SCE&G executives have insisted all week their parent company will suffer financially if it fails to win the requested rate hikes.
Since its last rate increase in 1996, the SCANA Corp. subsidiary has issued $700 million in bonds, $150 million in preferred stock, and $150 million common equity stocks.
“Our investors want to be absolutely sure SCE&G has a good cash flow,” said Kevin Marsh, chief financial officer for SCANA. “These rate increases will provide the return to those investors.
SCE&G also wants more funds now to meet its customers’ future need for electricity.
But regulators are concerned SCE&G wants $277 million to cover initial costs of building a 875-megawatt plant in Jasper County.
The utility won state regulatory permission last year to build the Jasper plant. Not until August, however, did it say it would have to raise electric rates to cover some of the capital costs.
This issue has disturbed some of regulators, who are concerned about the effects of a large rate hike while the national economy remains sluggish.
Commissioner Buddy Atkins said Friday regulators should have the power to determine, in advance, just how SCE&G would have raised the funds to build its Jasper plant, which ultimately will cost about $450 million.
“I think some legislation might be needed here,” he added later.
Former state Rep. Tim Wilkes, who is chairman of the S.C. Small Business Chamber of Commerce, said the proposed hikes are unfair because smaller enterprises would pay the greater increases.
He said the higher charges could force many small businesses, unable to pass increases to their customers, to shut down or go bankrupt.
“These increases are unwarranted,” he said.
Wilkes said the small business group will urge business owners and others to oppose the proposed increases by writing their legislators and commissioners.
“A lot of people see the rate increase as tantamount to a tax increase,” he said. “And they can’t afford it.”