Prompted by public complaints, the S.C. Public Service Commission has been asked to end a controversial SCE&G electric rate normalization program at the end of the year.
A study of the three-year program confirmed several problems with the weather-induced rate adjustment installed by S.C. Electric & Gas to smooth out spikes in customers’ bills and energy production in cases of extreme weather.
The concerns, confirmed Friday by the South Carolina Office of Regulatory Staff are that:
• Only SCE&G could generate and verify the complicated adjustment factor it used to calculate customers’ bills.
• The adjustment had a negative impact on customers’ conservation efforts and SCE&G’s energy-efficiency programs.
• The electric rate adjustment negatively impacts customers who use natural gas to heat their homes.
• The adjustment is not “transparent”– meaning neither ratepayers nor the Office of Regulatory Staff could monitor how the adjustment rate was calculated.
• The adjustment lacked sound rate structure.
The Office of Regulatory Staff, which is tasked with representing the S.C. public’s interest in utility regulation, made the recommendation to the Public Service Commission to end the program. The commission will make the final decision, according to Dukes Scott, the office’s executive director.
SCE&G, meanwhile, said its customers have collectively paid about $25 million less on their electric bills since the adjustment was approved by the Public Service Commission as part of a 2010 rate case settlement agreement. The company also said it would work with the PSC on its recommendations in the coming weeks. The utility serves 668,000 electric customers statewide.
“On the heels of the 2009-10 winter – one of the harshest on record in South Carolina – SCE&G developed the electric Weather Normalization Adjustment to help protect customers from spikes in their electric bills associated with extremely hot or cold weather. And in that sense, it has been effective,” said Eric Boomhower, SCE&G communications director. “However, the formula for calculating the impact of weather on customers’ bills is necessarily complex, which has led to customer concerns and questions about the (adjustment). During 2013, both SCE&G and the South Carolina Office of Regulatory Staff have reviewed the (adjustment) for potential changes. That review has included a consideration of customer feedback.”
As part of the program, the utility typically adjusts the bills of certain residential and small commercial customers by decreasing the rate those customers pay per kilowatt hour when summer is hotter than normal or winter is colder than normal, ostensibly lowering the power bill.
On the other hand, the utility also increases the charge to customers per kilowatt hour when summers are abnormally cool or winters are unusually warm, which therefore pushes customer power use lower than the utility could have expected.
But Regulatory Staff said it had received 189 inquiries and complaints from consumers about the adjustment, many of them from senior citizens. Seniors, some of them on fixed incomes, view the monthly adjustments on their bills as rate increases, critics of the program, such as the AARP found.
“The best way for customers to handle extreme highs and lows on their power bill and to better plan for monthly expenses is to enroll in SCE&G’s budget billing plan,” Teresa Arnold, AARP’s state director, said in a statement supporting an end to the program.