MCDERMOTT COLUMN: SCE&Gs latest rate hike ignites power play
Most people take electricity for granted. Until they’re given a reason not to.
It usually takes an epic disaster such as Hurricane Sandy to fix attention on the ho-hum process of making and delivering the magical, dangerous current that energizes everything from water heaters to factory machines and phone chargers.
Other times, a simple rate increase is all that’s needed to jolt the issue to the front burner.
South Carolina could be on the cusp of the latter scenario, as its only remaining Fortune 500 business pushes to raise the prices for the power it generates. Again.
Scana Corp.’s South Carolina Electric & Gas unit notified state regulators about its latest revenue-boosting plan in June. That comes on top of a two-tiered flurry of previous increases that have driven up prices 58 percent since 2004, with more still to come.
Now, the opposition is putting up its dukes and will likely come out swinging Monday at a public hearing in Charleston, not far from where the utility got its start in 1846,
It promises to be interesting.
A key question is emerging amid this latest rate debate: How will SCE&G’s higher price structure hamper the state’s ability to retain and recruit businesses, especially manufacturers?
Robert Johnston, a top executive with The InterTech Group Inc. in North Charleston and a longtime SCE&G critic, said the impact of another increase could cripple economic development in South Carolina.
“That hurts jobs. That hurts the tax base. ... That hurts everything,” he said.
6.61 percent request
SCE&G has proposed an average 6.61 percent increase for its 660,000 residential and business customers.
For residential customers, that would push their monthly bills to $141.73 per 1,000 kilowatts used. That’s 42 percent higher than Duke Energy, about 41 percent more than Progress Energy, and nearly 26 percent more than Santee Cooper.
The Cayce-based utility has said it needs the extra $150 million a year to comply with new regulations and to recoup past investments in its power-line system.
The S.C. Public Service Commission will review the request this month. If approved, the new rates would kick in early next year.
But first the commission is gathering public testimony, including comments to be made under oath at Monday’s hearing in Charleston.
Organized opposition is lining up, and it’s an eclectic group. While they have different motives and agendas, the AARP, Sierra Club and a coalition of big industrial businesses, among others, are all ganging up against SCE&G.
The testimony promises be juicy at times. Speakers will likely touch on executive compensation at the utility and on the wisdom of spending $10 billion to expand the V.C. Summer nuclear plant. The Public Service Commission also might catch heat for not being tough enough on SCE&G in past rate reviews and for not forcing the utility to rein in its expenses.
At the dance
One of the most vocal challengers from the business world will be S.C. Energy Users Committee, a coalition made up of big companies that buy vast amounts of power. They are livid over SCE&G’s steady drumbeat of price hikes. Their hired expert, Kevin W. O’Donnell, has filed a detailed 60-page argument against the proposed increase.
Among the group’s local foot soldiers are Johnston of The InterTech Group and another senior executive at the North Charleston-based manufacturing giant, Grant Reeves, who has been analyzing SCE&G’s power costs.
The company, which is building an aerospace parts plant in North Charleston, brings an insider’s perspective to the debate because it also is a sizable investor in various public electric utilities.
“We’ve been at this dance for quite some time, and we’re trying to get people to understand what the impact is on the state. ... Everybody is impacted by this,” said Johnston, whose home runs completely on solar power.
Both executives plan to testify Tuesday night. They’ll likely discuss SCE&G’s decision to spend millions on items such as its new headquarters at a time when most other companies were pulling back.
Another big talking point: the effect of higher power bills on businesses that want to move to or expand within the utility’s service territory.
“They may look at closing that plant, and building in another jurisdiction that costs less,” Johnston said.
Reeves said the normally low-key InterTech isn’t taking up the cause purely for its own economic benefit. He and Johnston pointed to CEO Anita Zucker’s longtime hands-on involvement in local economic development issues, such as job creation and education.
“She is truly engaged in all of this,” Johnston said,
Reeves added that Zucker and her family have demonstrated over the years that they don’t walk away from problems in their own backyard. They try to fix them. And right now, they see a problem.
“The bottom line is our electric rates are too ... high,” Reeves said.
Contact John McDermott at 937-5572.