SC House Public Utilities Subcommittee
January 29, 2025
Testimony on House Bill 3309
Frank Knapp
President & CEO
Since 2002, either I or the SC Small Business Chamber of Commerce has intervened in utility electric or gas rate hearings before the Public Service Commission. We’ve done this 11 times.
So, we have a good understanding of the process and how utilities push to get what they want in that process.
The agreed upon issue before us is our state’s future energy needs.
The questions that need to be answered are:
How much new energy generation does the state need?
How should that energy be generated?
Where should that new generation be located?
Who should pay for it?
These are complicated issues that will take much time and expertise to answer.
That’s why we have a Public Service Commission to gather all the information, hear from all the diverse parties who want to offer advice, and finally make a ruling.
But here is the problem.
The utility companies aren’t happy with the PSC decisions on a wide array of issues it has made over the recent years.
So, the utilities want changes to put them more in control over the PSC decisions.
So here is what this bill would do.
First, the bill reduces the number of Public Service Commissioners from 7 to 3. One justification supporters have given for this provision was that it was too difficult for 7 Commissioners to arrive at rulings. There is no evidence of this. We have heard from a previous Commissioner who said that the PSC did not have such a decision-making problem.
Supporters of this have said that the PSC needed better qualified commissioners. What they meant was that they wanted retired utility executives to serve on the PSC. So this bill raises the pay for the three new commissioners it calls for by $68,409, a 46% raise. This would bring the compensation for PSC commissioners to $224,000 plus state employee benefits.
At your recent hearing on this bill, one industry person suggested that the reduction in size of the PSC is simply an effort to save the state money. Well, there are other ways the state can save money, but reducing the number of Commissioners providing a valuable service to the ratepayers of the state is not one of them.
The purpose of this effort is to replace the current commissioners with utility-friendly commissioners.
Second, the utilities also want to change their fortunes with the PSC by stopping the SC Consumer Advocate from representing consumers in rate hearings. Clearly, the utilities are not happy with the assertiveness of the Consumer Advocate in the regulatory process.
So, House Bill 3309 moves the Consumer Advocate function into the Office of Regulatory Staff. While ORS is a valuable part of the regulatory process, it cannot take a hard line for the consumer when it is also charged with trying to reach a compromise between utilities and all intervenors.
Third, to make it even more difficult for ORS to also play the role of the Consumer Advocate, this bill also tells ORS to be concerned with the financial health of the utilities, reversing a change made after the failed nuclear project at VC Summer. Clearly, a consumer advocate within ORS cannot be as effective as one independent of ORS, especially if ORS is instructed to be concerned about the financial health of utilities.
We strongly urge that the anti-consumer provisions in this bill—cutting the number of commissioners from 7 to 3, firing the independent Consumer Advocate, and telling ORS to be concerned about the utilities’ financial health—would basically turn the Public Service Commission into the Utility Service Commission.
While we have other objections to House Bill 3309, let me mention two.
The entire section titled “Economic Development Rates” should be struck.
The SC Department of Commerce on its website says that we are one of the top five states to do business in the nation. One of the reasons is our lowest in the Southeast electricity rates.
We don’t need new electricity incentives to attract industry.
And we certainly don’t need to allow utilities to offer so called “transformational customers” an electric rate lower than the marginal cost, the cost of producing the electricity.
If you keep this section and it passes, wait till your constituents learn that their rates will need to go up to subsidize the electric rates of not only one major industrial customer, but every other existing industrial customer in the state that is a competitor with that “transformational customer”.
And while House Bill 3309 is silent on the issue of AI data centers, it shouldn’t be. These data centers don’t employee a lot highly-paid staff but they do require massive amounts of electricity that is driving the need for expensive, new generation.
South Carolina simply does not need AI data centers in the state to benefit from the new technology. The state and local governments should not be giving incentives to encourage these data centers to locate here. The state should require, which is now the case in Georgia, that data centers pay for the new generation they need and not put that burden on the other customer classes.
This bill is simply to large and cumbersome. The bill only needs to allow Santee Cooper to partner with Dominion and Duke to build new generation and it should address data centers.
The South Carolina Small Business Chamber strongly recommends that this subcommittee take more time to work on this bill to address the concerns we raise, and those concerns raised by other consumer groups.
Our goal is to protect all small business ratepayers from unnecessary rate increases as the state addresses its future energy needs. This bill as written would make our job almost impossible.