Supreme Court says SC has to let Blue Granite cover new office space with raised rate
The S.C. Supreme Court has ruled that state regulators must allow a private water company to collect money from ratepayers to cover some costs associated with its new headquarters, even as the justices were critical of the price tag associated with the new “opulent” offices.
Blue Granite Water Co. had asked to collect the cost of its new office space in downtown Greenville after the rebranded utility, formerly known as Carolina Water Service, moved from its West Columbia headquarters. The Supreme Court joined state regulators in criticizing the rent in Greenville and the money spent to improve the offices, which amounted to $500,00 for 10 employees.
“The yearly rent for Blue Granite’s new Greenville office space was $73,665 — almost triple the $27,260 annual cost of office space in West Columbia,” the court said in its order, written by Justice John Kittredge and concurred with by the court’s four other justices.
“The decision to rebrand the company while simultaneously moving into an unnecessarily-expensive office location is yet another example of Blue Granite self-inflicting wounds to its reputation and requesting its customers reimburse it for the associated expense,” the justices wrote in their order.
But the court’s order, filed Sept. 1, mostly upheld a prior decision by the S.C. Public Service Commission to deny Blue Granite the full rate hike it had sought, which would have caused some customers’ bills to jump by up to 56%.
Blue Granite serves 30,000 customers across South Carolina, including many in Lexington and Richland counties and near Rock Hill in York County. The company had appealed the commission’s decision to the Supreme Court earlier this year, seeking to recoup $23 million the company said it had spent on infrastructure improvements.
But the one area the court’s justices disagreed with the commission was in denying Blue Granite the ability to cover its rental expenses, even as the court order agreed with commissioners that asking customers to cover the full cost of Blue Granite’s headquarters in a renovated historic building on Greenville’s South Main Street was unreasonable.
“It is, of course, not unreasonable for Blue Granite to want to provide its executives opulent offices as a job perk,” the Supreme Court found. “However, as the PSC found, it is unacceptable to pass the costs associated with that opulence on to ratepayers, who receive no quantifiable benefit from an expenditure of that type.”
However, “Blue Granite is entitled to collect from ratepayers some reasonable amount for its headquarters office rental.” The court sent the matter back to the Public Service Commission for consideration.
The court also indicated Blue Granite should better justify its decision to open its new Greenville office, finding the data it used for Greenville, Columbia and West Columbia markets was not comparable. The justices said the company would have to produce identical data for all three cities, plus Anderson and Rock Hill, where Blue Granite already has offices.
“Moreover, it is incumbent upon Blue Granite to present evidence of reasonable rental amounts for similarly-sized offices, regardless of their location in Greenville or throughout the state,” the court order said. “We find it highly likely there are a number of alternate office locations — in Greenville and elsewhere — that would demand significantly less in yearly rental expenses than a historic building on South Main Street.”
The company’s annual rent in Greenville’s prime real estate market stood in stark contrast to the $11,174 in yearly, combined rental expenses paid by ratepayers for Blue Granite’s other five locations throughout the state, the court found.
The new Greenville office also required extensive upgrades to make it a functional office space, the court found, including things such as new drywall, paint, telephone ports, wiring and office furniture.
“While Blue Granite repeatedly claimed that its new office was ‘not luxurious or gold-plated,’ the upfit expenses totaled approximately $500,000 for an office space intended to house only ten employees,” the court said.
The state Office of Regulatory Staff had opposed Blue Granite’s rate request, arguing it was part of a wider rebranding effort after criticism of its services and not related to the company’s operations.
“The Company represented to its customers that the refreshing of the Company’s brand would be at no cost to them and is now contradicting that representation by attempting to pass on to customers relocation and office upgrade costs that were part of its rebranding,” state regulators said, adding that Blue Granite’s brand problems were “were caused by the Company, not its location.”
ORS said the costs of such an upfit were “difficult to explain to customers that struggle to pay their water and sewer bills,” when other more modest accommodations were available.
This story was originally published September 7, 2021 at 1:25 PM.
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