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Utility argues in SC Supreme Court on charging customers for legal costs over river spills

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The utility Blue Granite was cited for 23 illegal discharges of polluted water into the Saluda River over the years. It was ordered by the state's Public Service Commission not to charge ratepayers for $416,000 in legal costs incurred trying and failing to defend its actions. It is appealing that order. File/David Caraviello/Special to The Post and Courier

COLUMBIA — A Midlands utility's long history of river pollution and failures to fix the problems mean that it should not ask ratepayers to cover its legal costs after losing an environmental court case, a watchdog agency argued before the S.C. Supreme Court on March 23. 

The utility, once called Carolina Water Service and now going by Blue Granite, was ordered by the state's Public Service Commission not to charge ratepayers for $416,000 in legal costs incurred trying and failing to defend its actions. It is appealing that order.

In state Supreme Court arguments March 23, an attorney from the watchdog Office of Regulatory Staff argued that the utility's long misconduct made it improper to charge the ratepayers for its defense.

Carolina Water Service was cited for 23 illegal discharges of polluted waters into the Lower Saluda River over decades of doing business, ORS attorney Christopher Huber reminded the court. The utility also failed for years to connect its system with the town of Lexington and shut down its plant, which was a long-term requirement of law.

The utility lost the federal lawsuit filed by the Congaree Riverkeeper environmental organization only after years of such failures, Huber said.

Those violations make it clear that the company's legal defense was not an ordinary part of doing business, the standard for making ratepayers cover its costs, Huber said.

On behalf of the company, attorney Frank Ellerbe argued that Carolina Water Service was properly defending itself in the kind of court cases that utilities frequently face.

The company made reasonable efforts to comply with the law, including to make its temporary plant permanent or to connect with Lexington's system, Ellerbe said. 

"Good-faith efforts were made by lots of people," Ellerbe said.

The company's history of violations stretching back years provoked some challenging questions from Supreme Court justices.

Chief Justice Donald Beatty noted the long nature of the utility's issues in wondering whether the legal expenses from the court case it lost in 2017 could be considered a reasonable expense.

Customers expect their dollars to be used to operate the utility within the law, not to defend repeated violations, Huber argued.

The Congaree Riverkeeper even warned the utility that it intended to file suit one year before it did, but the utility did not act to resolve the issue, he said.

After hearing arguments from both sides, the Supreme Court will rule later.

The denial of attorneys fees is only the latest way the Public Service Commission has acted to rein in Blue Granite.

Last year, the commission cut by more than half a requested rate increase by the utility.

Among the costs that the commission found could not be passed along to ratepayers: almost $500,000 in costs for a posh new office in Greenville for the utility, plus about $84,000 in annual rent. The utility moved from West Columbia to offices in downtown Greenville in 2018.

The commission also gave Blue Granite one of the lowest profit margins in the utility field by cutting its 55 percent rate request.

Blue Granite said it sought to move to the Upstate to attract more talent to its staff, but the commission found that the company's hiring challenges related to its diminished reputation. 

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