Columbia, SC (WLTX) - Representatives with South Carolina Electric and Gas (SCE&G) say rate reductions requested by the Office of Regulatory Staff (ORS) could have a huge financial burden on the company.
In an early December hearing with the Public Service Commission (PSC), a lawyer for the electric utility even mentioned the possibility of bankruptcy if a request for rate relief is approved by the PSC.
On December 21 the PSC denied SCE&G's motion to eliminate a rate relief request by the ORS.
The ORS requested an immediate rate cut back in September, shortly after the abandonment of construction at the V.C. Summer Nuclear Plant.
SCE&G has said that if those cuts, which add up to about $445 million, went into effect, then there would be a huge financial burden to the company.
"This was a preliminary sign that SCANA might not have an easy road ahead in terms of recovering their cost," says Travis Millier, energy and utility strategist with Morningstar. "That said, this was a preliminary type hearing and the real debate and the real outcome will happen throughout 2018 and even 2019 and beyond."
"The most financially painful outcome for the company would be if they had to refund the nearly $2 billion that they already collected from customers," says Miller. "SCANA throughout has said that they would be willing to reduce the current rates."
In November, SCE&G announced a plan to cut $4.8 billion, about $90 million annually, but that's still a fifth of what the ORS is asking the company to cut from their rates on an annual basis.
Jimmy Addison, who is currently SCANA's chief financial officer and will become its chief executive officer January 1, 2018, released this statement on the December 21 hearing:
“We welcome the ORS's examination of our books and records to evaluate our revenue requirements. We are also encouraged by the Commission's decision to move forward with a hearing that will allow for the full development and review of the relevant facts and issues before making such a critical decision on this matter, which will ultimately have great ramifications on not just SCANA and SCE&G, but also on SCE&G's customers. We continue to believe working toward a collaborative and reasonable resolution is in the best interest of all stakeholders."
"It's going to be a long slog if SCANA can't come to a negotiated agreement with the opposition groups and consumer advocates," says Miller.
The hearing on December 21 was preliminary, and the PSC says they will announce a date for a future hearing, where they will hear the issue in full, with evidence and arguments to be provided by both sides.