COLUMBIA — South Carolina's utility regulators are taking a new tact with the state's power providers, clamping down on profit margins and restricting plans to raise the monthly bills of tens of thousands of ratepayers.
And the CEO of the state's biggest electric supplier isn't pleased about the dramatic shift.
"It's clear the regulatory and related business environment in South Carolina has changed, and this will affect the investment climate in the state, in our industry and in others," Duke Energy CEO Lynn Good said in an earnings call last week.
She was referring to the Public Service Commission's decision to throw out roughly half the costs Duke's two utilities wanted to pass along to 761,000 ratepayers in the Pee Dee and Upstate.
"We were disappointed with certain critical aspects of the rulings," Good told investors and analysts.
The state's seven utility regulators slashed the profit margins that Duke's two South Carolina utilities can collect from electric customers in the state, possibly cutting into the dividends paid back to Wall Street investors.
They also threw out around $242 million in coal ash cleanup costs that Duke wanted its ratepayers to cover in the coming years.
In doing so, the commissioners signaled a willingness to buck the investor-owned utilities, which have benefited from a cozy relationship with state officials for years.
Part of the change has been fueled by the three new regulators state lawmakers recently elected to the utility commission. Tom Ervin, one of those new commissioners, set the tone when it came to scrutinizing Duke's rate requests during hearings last month.
In one instance, Ervin openly criticized the company's failure to provide receipts for nearly $1 million in legal expenses the company wanted to recoup from customers.
"We are not going to be a rubber stamp," Irvin said bluntly. "If that has been the historic practice, that's over.
"If you are going to ask for a reimbursement, we have to have proof," he added.
The rulings in the Duke Energy cases, however, also say something about the overall attitude of electric customers in South Carolina.
Many power customers in the Palmetto State have become hyper-aware of their monthly electric bills in recent years. And for good reason.
South Carolinians, on average, pay more money for electricity than most of the country. Only Hawaii and Alabama have higher residential power costs, according to data from the U.S. Energy Information Administration.
Utility regulation also became a particularly hot-button issue in the Statehouse following the cancellation of two $9 billion nuclear reactors at V.C. Summer station in 2017.
The commission's decisions in the Duke Energy cases reflects that reality. And it's a change that many state lawmakers are welcoming.
"There's a balance that needs to be achieved," said Rep. Kirkman Finlay, R-Columbia. "I think for years rate increases were just rubber stamped."
Sen. Tom Davis, R-Beaufort, is so frustrated with the state's utility industry he wants to eliminate the system that provides each company with its own monopoly. But until it is changed, Davis said, the state's regulators need to hold the utilities in check.
"You have to have a PSC that realizes they are the only ones that stand between ratepayers and the rate hikes," he said.
Duke isn't the only utility that will have to contend with South Carolina's more aggressive regulatory environment moving forward.
Dominion Energy, which purchased South Carolina Electric & Gas after the nuclear debacle, will have to face the same commissioners in the near future.
The Virginia-based company is expected to ask the commission to raise rates on customers in Charleston, Columbia, Aiken and Beaufort sometime next year. The exact amount is unknown.
But when it does, the company could face a more skeptical group of regulators.