Painful rate hikes demand justification

Construction continues on new nuclear reactors at the V.C. Summer site in Fairfield, S.C. in this file photo. (Provided/SCE&G)

There was no discussion. The vote was unanimous. And so the state Public Service Commission approved yet another rate hike for South Carolina Electric & Gas Co. customers on Wednesday.

The 2.6 percent increase will help pay for two new nuclear reactors under construction at the V.C. Summer site in Fairfield.

Though the decision should come as no surprise — it is the eighth hike in seven years related to the reactors — the apparent lack of scrutiny from the commission is discouraging, at best.

Public Service Commission members are charged with checking the power of the state’s utilities and defending the interests of South Carolinians who rely on those utilities for dependable, affordable energy. According to the commission’s mission statement, the goal is to ensure that “core or captive customers with little market power are not unduly burdened with the costs of competition.”

But the skyrocketing electric bills paid by SCE&G customers each month — average bills have increased by roughly 35 percent since 2008 — call into question the effectiveness of the PSC in achieving that goal. At the very least, they owe their constituents an explanation about their complacency.

Instead, South Carolinians get one rubber-stamped rate increase after another.

Paying increased rates under the state’s 2007 Base Load Review Act is supposed to save customers money in the long run by paying for financing during construction of new plants rather than when they come online.

However, there’s no indication just how, when or if SCE&G customers might benefit from those purported savings.

SCE&G contends that financing the reactors under the BLRA will save customers $1 billion in short-term costs and $4 billion over the life of the reactors. But it seems nobody has ever bothered to validate that claim.

Now, the new reactors are more than $1.1 billion over budget and three years behind schedule. And as costs escalate, potentially eating away at any financial benefits consumers might one day enjoy, it is more important than ever to find out how — and if — the BLRA will save ratepayers money.

Fortunately, the state Office of Regulatory Staff is doing just that.

According to Dukes Scott, the ORS director, his agency will hire an independent accounting firm to verify the SCE&G claim.

They will also look more broadly at the potential benefits — or lack thereof — the BLRA provides. The ORS hopes to have an audit prepared by the new year.

That will give the state Legislature the opportunity to take an informed look at the BLRA.

In the meantime, the PSC has some explaining to do. If SCE&G customers are to bear a continuing series of rate increases, they ought to know why, and what the PSC is doing to fulfill its mission on behalf of consumers.

On Wednesday, the PSC proved itself unable or unwilling to provide such an explanation.

That is simply unacceptable.

The state AARP chapter and the S.C. Small Business Chamber of Commerce have spoken out against further rate increases and asked that the BLRA be reevaluated. The S.C. Sierra Club has gone a step further and demanded reconsideration of the process by which PSC commissioners are appointed.

The outrage is justified. South Carolina’s ratepayers deserve more than just another rate hike.