Frank Knapp with the S.C. Small Business Chamber of Commerce argues a House bill puts utility profits over consumers. (File photo by Anton Petrus/Getty Images)
Since 2002, the SC Small Business Chamber of Commerce has intervened in 12 electric rate cases at the SC Public Service Commission.
We have had tremendous success over the years in fighting utility rate hikes to keep small businesses from unfair increases in their monthly bills.
This successful track record will largely come to an end if one piece of legislation now in the Senate passes without changes.
House Bill 3309 has two blatantly anti-consumer consumer provisions that will prioritize the profits of our two state public utilities (Dominion Energy and Duke Energy) and the recruiting of industry by the SC Department of Commerce in the electricity ratemaking process.
First, the bill adds to the mission of the Office of Regulatory Staff. This is the state agency responsible for reviewing utility rate proposals and working with groups representing residential, small business and large energy users to arrive at a consensus alternative rate proposal fair to all classes of customers and the utilities.
If this effort is successful, Office of Regulatory Staff submits the plan to the Public Service Commission for approval.
If not, there is a rate hearing before the full commission on the utility’s rate hike proposal.
After the V.C. Summer nuclear debacle, the state Legislature took the correct move to change the mission of the Office of Regulatory Staff so that it would no longer be concerned about the financial health of the utilities.
Today, the agency is not to favor any class of customer or the utility’s financial health in its work.
However, if H.3309 passes as is, it will turn the agency into a champion of the utilities and an arm of the Department of Commerce by adding to the Office of Regulatory Staff mission that its purpose includes economic development, job attraction and the preservation of the financial integrity of the state’s public utilities.
The agency’s role to be fair to residential and small business ratepayers would be subservient to serving the financial health and growth of utilities to promote economic development.
The second blatantly anti-consumer provision in H.3309 would create new economic development electricity rates to attract industry to the state.
The Commerce website proudly points to a national development magazine which “consistently ranks South Carolina as one of the top five states to do business in the nation.”
We are continuously told that one of the reasons is that we have the lowest electricity rates in the Southeast. Our state’s anticipated industrial growth is used to justify the need to build more power plants, which also leads to higher rates for consumers and more profit for the utilities.
Clearly, we don’t need new electricity incentives to attract industry, especially if those incentives will result in higher electricity costs for residential and small business ratepayers.
Yet, that is exactly what H.3309 would do by specifically giving utilities and the Department of Commerce authority to propose discounted electricity rates not only for prospective industrial customers but also to the competitors of those industrial customers already located in our state.
These incentive rates do not lower the cost of generating and delivering electricity. This provision would simply transfer an untold amount of those costs from industrial customers to residential and small business consumers guaranteeing them rate hikes.
With its mission changed and these industrial incentive rates, the Office of Regulatory Staff would be legally obliged to favor the utilities and the Department of Commerce.
No longer would the electricity ratemaking process at the Public Service Commission be a fair assessment of the utilization by customer classes to determine rates.
Instead, it will be driven by Commerce’s industrial recruitment decisions with the underlying premise that all residential and small business ratepayers should be willing to pay higher electricity bills so that the state can have a few more industrial jobs.
The most egregious part of these industrial incentive rates is that some of the largest industrial prospects, referred to as “transformational customers”, could be offered rates lower than the cost of producing the electricity.
Residential and small businesses would not only be paying more than their fair share but subsidizing the actual cost of producing and delivering electricity for some industrial customers.
The concept of all classes of customers paying electricity rates based on their utilization is completely thrown out by these proposed industrial incentive rates in H.3309.
For 23 years the SC Small Business Chamber of Commerce has fought to protect small businesses from unnecessary electric rate increases.
This bill, H.3309 as written, would make our job almost impossible.