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Facing staunch opposition and a massive public outcry, South Carolina Electric & Gas Co. will lay out its case for a surge in electric rates Monday before the state Public Service Commission.

The utility's latest proposal of a 4.88-percent rate hike, about half of its original request of 9.52 percent, eliminates bonuses for all employees and raises except for union members. The proposal also cuts the amount shareholders receive by $37 million from 11.6 percent to 10.7 percent, slices about $10 million in additional tree-trimming expenses and slashes several million dollars for expenses related to equipment, coal stockpiles, storm reserve funds and miscellaneous items, according to Kenny Jackson, SCE&G vice president of rates and regulatory services.

In all, $96.3 million has been axed from the $197.6 million the Cayce-based company said it originally needed in additional revenue each year to operate efficiently.

Still, customers say the SCANA-owned utility asked for more than it needed to get a reduced amount and should be denied any increase in rates because of the anemic economy.

"It's disingenuous," said Robert

Johnston, an executive vice president with The InterTech Group Inc., a North Charleston company that owns a large stake in a Vermont electric utility. "The rate request they originally asked for was not based on economic need. It was based on what they wanted. Is the latest proposal the real number or is there more to be cut? This still seems to be substantially excessive. In this environment with no inflation, record high unemployment rates and serious state budget problems, I'm hoping the rate increase will be zero."

An SCE&G spokesman said the company could justify all the items in its original request.

"For everything we included in the application, we were prepared to make a sound case, but the economy is continuing to be in rough shape," utility spokesman Eric Boomhower said. "These are real, legitimate expenses that we built into our application. We listened and heard the concerns of our customers. We tried to strike a balance between the needs of our company and concerns of our customers."

The utility's latest proposal cuts the amount of extra money it says it needs to operate to $101.3 million a year.

Remaining in the rate hike request are funds the company says it needs to pay for federally mandated environmental upgrades of coal-fired power plants and a backup dam near Columbia, property taxes, and maintenance of the utility's distribution and transmission systems for its 655,000 customers. About half of those are in the Charleston metro market.

If approved, the latest proposal would cost a household using 1,000 kilowatt hours of electricity about $5.79 a month, or $69.48, extra each year, when it is fully in place over the next two years starting in July. The original request would have cost customers about $140 over 12 months.

Rates would go up 2.5 percent in July, 1.2 percent in July 2011 and 1.18 percent in July 2012.

The proposed rate schedule includes about $25 million collected from customers during this past winter that would go back to them and another $48 million in tax credits.

The increased power costs would come on top of an already approved average annual spike of 2 percent over the next decade to pay the $10 billion cost of two new nuclear reactors north of Columbia.

Customers say now is not the time to burden them with another rate hike.

"I don't think they are entitled to any rate increase at this time," said Bill Cox, a SCANA shareholder and owner of Island Fresh Seafood on Yonges Island. "This is not the right time. They are going to hurt small companies."

Eugene Platt of the James Island Public Service District wants "no rate increase whatsoever" through June 30, 2011, since the agency's budget has already been approved.

Tom Clements of Friends of the Earth, an intervenor in the SCE&G case, said there is some justification for a slight rate increase because of the required environmental measures, but he said the reduced rate proposal, first to 6.55 percent and then to 4.88 percent after hundreds of ratepayers protested through letters and public hearings, calls into the question the legitimacy of the original request.

"It strikes me as quite odd that they would agree to a reduced rate when the testimony of witnesses is quite firm that they needed 9.52 percent," Clements said. "They have undermined their credibility. It's always the thought that they will go for the higher rate increase than they would get."

The PSC has not denied SCE&G at least part of its rate increase requests since 1971.

Clements credited the public outcry for helping to reduce the rate to the latest level, a sentiment echoed by Dukes Scott, executive director of the state Office of Regulatory Staff, another intervenor which helped craft the latest compromise.

"What helped us in our negotiations were the customers and their letters and their concerns," Scott said. "That helped us negotiate a better settlement than we otherwise would have."

One item missing from the latest stipulation is that nothing prevents SCE&G from returning in January to ask for another increase in electric rates.

In January, PSC members barred Charlotte-based Duke Energy from asking for another rate hike on anything but fuel for two years.

"That's an issue we haven't worked out yet," Scott said of the SCE&G case.

A decision is expected by July 15.

Reach Warren Wise at wwise@postandcourier.com or 937-5524.