SCE&G seeks to increase electricity rates 6.61%
Two and a half years after asking for a nearly 10 percent increase in its electric rate that was later cut in half, South Carolina Electric & Gas Co. again wants to raise the amount its 668,000 electric customers pay.
The Cayce-based utility filed for a 6.61 percent overall rate hike Friday with the S.C. Public Service Commission.
If approved, it would be the 11th increase in SCE&G’s base electric rates in five years, not including four upward rate adjustments to pay for fuel to make power.
At the same time, the company is asking PSC to reduce the fuel cost portion of electric rates to reflect the declining cost of natural gas to produce electricity.
Adjustments to fuel cost usually occur in May, but SCE&G is requesting the reduction now to lessen the impact of the rate increase, said Keller Kissam, SCE&G’s president of retail operations.
With the fuel cost reduction, the overall rate hike on residential customers would come to 4.85 percent, and the monthly bill of a residential customer would spike $6.67 for each 1,000 kilowatts used. That comes out to about $80 a year more for electricity.
The Scana subsidiary is the largest power provider in the Charleston area. About half of its statewide customers live in Berkeley, Charleston, Colleton and Dorchester counties.
The utility said the requested spike in rates is primarily being driven by higher costs associated with reliability of its power grid and regulatory compliance as well as the expiration of a large power sales contract to an out-of-state utility.
“It’s never a good time for an increase,” Kissam said. “I am a customer too.”
But he said the rate hike is necessary to keep the power on.
“Since our last rate filing, we’ve spent nearly $300 million on upgrades and improvements to our electric transmission and distribution system in order to remain in compliance with federal law and to continue providing safe and reliable service to our customers,” said Kissam.
“We’ve also spent millions of dollars putting environmental equipment in service at our Wateree Station power plant to comply with federal air emission standards, and spent another $30 million on other environmental upgrades and projects at our various power plants,” Kissam said. “Plus, our property taxes have increased by $16 million a year.”
He also explained the expiring sales contract along with the recently announced scuttling of older coal-fired power plants and their part in the rate increase.
“When we built our natural-gas-fired Jasper Station power plant, which was put into service in 2004, we were able to create construction-cost efficiencies by building it to a capacity that exceeded our system needs at the time and entering into a long-term contract to sell the excess capacity off system,” Kissam said.
That contract will expire at the end of the year, freeing up 250 megawatts of power that will help replace some of the electric generation lost as SCE&G abandons six aging coal-fired power units by 2018.
The utility will save about $6 million a year by closing its old coal plants, but it will cost about $23 million to replace their lost power.
“We still need power to meet the needs of our customers,” SCE&G spokesman Eric Boomhower said.
The new rate hike request comes two and a half years after SCE&G asked for a 9.52 percent rate increase that brought howls of protest across the state.
One of those who spoke out loudest against the rate increase then was Rob Johnston, vice president of the North Charleston-based global conglomerate The InterTech Group, which invests in utilities as part of its business.
On Friday, he came out against the latest rate hike as well.
“They continue to pillage the ratepayers,” Johnston said. “I don’t see how in good conscience they can ask for anything.”
For small-business owners, such as Kelly Williams of Charleston Florist, the increase will hurt on multiple fronts. Williams said her business had its most expensive electric bill ever last month — $700 — well before the new rates would take effect.
But the increases affect business doubly, by raising home electric bills and eating up some of her customers’ expendable cash.
“(Flowers are) what you would consider a luxury item, so my customers, when their bills go up, it’ll affect how much extra income they can spend with me,” Williams said. “I’m not a grocery store; you don’t need me. I’m usually everybody’s leftover money.”
Across the street, Brad Rickenbaker, the owner of Joint Venture Jewelry, and Rick Reinert, an owner of Reinert LePrince Fine Art, said the 1.36 percent increase for small businesses probably wouldn’t affect their stores’ bottom lines very much.
“I guess that’s the cost of doing business,” Rickenbaker said.
At home, though, he expected the impact to be more significant, especially in the summer, a point particularly poignant in Friday’s near-record temperatures.
“That’s a pretty big jump,” he said. “(Especially) trying to heat and air condition in the Lowcountry heat.”
The proposed rate increase will be in addition to the annual rate hikes averaging 2.36 percent through 2018 to pay for the $10 billion construction costs of two new nuclear units SCE&G is building at the V.C. Summer nuclear plant north of Columbia. The project is in conjunction with state-owned utility Santee Cooper, which owns 45 percent of the two new units.
SCE&G customers can expect another 1.18 percent increase in their power bills next month. That’s when the final phase of a three-year overall 4.88 percent rate hike approved by the Public Service Commission two years ago today will take effect.
A public hearing on SCE&G’s latest rate request is expected in the fall. If the rate hike is approved, it would take effect in January.
Thad Moore contributed to this report. Reach Warren L. Wise at 937-5524 or twitter.com/warrenlancewise.