PSC to reconsider whether SC utility customers foot legal bill for pollution

Some Midlands and Upstate customers — worried about having to pay higher water and sewer bills — might see some relief.

The S.C. Public Service Commission granted a request Wednesday to reconsider higher water and sewer rates for up to 28,000 customers. That money would go, in part, to pay Carolina Water Service's legal expenses for a pollution case that the utility lost.

"The rehearing ... hopefully, will provide us more light so that we're not faced" with an all-or-nothing decision in setting rates, commissioner Elliott Elam said.

Carolina Water is a privately owned utility that serves parts of Columbia, Rock Hill, Anderson and other communities.

In May, commissioners approved $2.9 million in higher water and sewer rates for Carolina Water to, in part, cover its legal costs. The PSC also voted to allow Carolina Water's owners a 10.5 percent profit.

The S.C. Office of Regulatory Staff argued Wednesday that the commission erred in charging ratepayers for the legal fees.

"The commission's decision has placed the entire cost of any litigation on the ratepayer — even when a court finds that the utility has been operating illegally," Regulatory Staff said in its petition to the PSC. "There is, of course, no benefit to CWS ratepayers in the company having to defend itself from allegations, proven to be true."

A utility spokesperson could not be reached for comment late Wednesday afternoon.

The utility sought to recover nearly $1 million in legal fees and costs incurred in five legal actions. Most of that money was spent defending Carolina Water in a federal lawsuit filed by the Congaree Riverkeeper over the utility's release of sewage into the lower Saluda River.

The lawsuit alleged that, for years, Carolina Water had allowed poorly treated sewage to drain into the river from its aging Interstate 20 wastewater plant.

Carolina Water lost the case and was assessed a $1.5 million fine for violating the Clean Water Act and required to close a discharge pipe from the I-20 plant.

Commissioners directed Carolina Water to present the PSC with more detailed information of its legal costs, the status of each case and the reasonableness of the fees.

Carolina Water contends the utility's legal expenses were justified and could be repaid by customers over time.

"The commission found that, like all businesses, CWS will incur litigation costs associated with its business operations and should act to protect itself and its ratepayers against claims for liability," Carolina Water said in its response to the Regulatory Staff petition.

A date for a new hearing has yet to be set, but commissioners directed staff to set "an aggressive schedule."

The PSC is under intense scrutiny from state leaders and citizens outraged that it allowed SCE&G to raise rates nine times in less than 10 years to pay for two nuclear reactors that the utility eventually abandoned, mid-construction.

That nuclear debacle is playing a role in Regulatory Staff's opposition to Carolina Water recovering its legal costs, a spokesman said.

"We didn't want (the Carolina Water rate decision) to set a precedent that could allow another utility facing adverse litigation to pass all its costs, even if found guilty of wrongdoing, to ratepayers rather than shareholders," Regulatory Staff spokesman Ron Aiken said. "We don't believe that's something in ratepayers' best interests."

This story was originally published July 11, 2018 at 6:37 PM.