CAYCE, S.C., June 29, 2012 /PRNewswire/ -- South Carolina Electric & Gas Company (SCE&G), principal subsidiary of SCANA Corporation (NYSE:SCG), today filed an application with the Public Service Commission of South Carolina (PSC) requesting a 6.61 percent overall increase in retail electric base rates.
Keller Kissam, SCE&G's president of retail operations, said the company's base rate filing – its first since January 2010 – is primarily driven by increased costs associated with improving reliability and ensuring regulatory compliance.
"Since our last rate filing, we've spent nearly $300 million on upgrades and improvements to our electric transmission and distribution system in order to remain in compliance with federal law and to continue providing safe and reliable service to our customers," said Kissam. "We've also spent millions of dollars putting environmental equipment in service at our Wateree Station power plant to comply with federal air emission standards, and spent another $30 million on other environmental upgrades and projects at our various power plants. Plus, our property taxes have increased by $16 million a year."
Kissam said the expiration of a key, off-system sales contract is another driver in the case.
"When we built our natural-gas-fired Jasper Station power plant, which was put into service in 2004, we were able to create construction cost efficiencies by building it to a capacity that exceeded our system needs at the time and entering into a long-term contract to sell the excess capacity off system," he said. "That contract expires at the end of this year, making available 250 megawatts of generation for our customers. This will assist us in replacing power that will no longer be available to our customers as we carry out plans to retire some of our older coal generation. While retiring that coal generation will help reduce annual expenses by about $6 million, the net impact of replacing the power is about $23 million."
Kissam said customers are benefitting from the company's focus on reliability. SCE&G is among the leading utilities in the southeastern United States for reliability, having achieved a 20 percent reduction over the past five years in the average amount of time its customers are without power.
"Providing our customers with reliable service is the most important thing we do," said Kissam. "Our daily focus is on providing that service safely, cost efficiently, and in compliance with the many rules and regulations that govern our operations."
Kissam said SCE&G recognizes that its customers continue to deal with challenging economic times. To help soften the impact of the requested increase on customers, he said SCE&G is seeking to simultaneously reduce the fuel cost portion of its electric rates. The company normally adjusts its rates up or down each May based on the cost of fuel for its power plants. "Fuel costs have been declining," said Kissam. "As part of today's filing, we're asking to accelerate to customers the benefit of those lower costs. This will effectively lower the amount of the increase."
A public hearing on SCE&G's application is expected to be held in the fall. If the PSC approves the fuel cost decrease and the base rate increase as filed, rates would increase in January 2013 as follows:
- Residential customers:
- Small commercial customers:
- Medium commercial customers:
- Large commercial/industrial customers:
The monthly bill of a residential customer using 1,000 kilowatt hours of electricity would increase $6.67.
SCE&G is a regulated public utility engaged in the generation, transmission, distribution and sale of electricity to approximately 668,000 customers in South Carolina. The company also provides natural gas service to approximately 319,000 customers throughout the state. More information about SCE&G is available at www.sceg.com.
SCANA Corporation, headquartered in Cayce, SC, is an energy-based holding company principally engaged, through subsidiaries, in electric and natural gas utility operations and other energy-related businesses. Information about SCANA and its businesses is available on the company's website at www.scana.com.
South Carolina Electric & Gas Company
Retail Electric Rate Application
The Public Service Commission of South Carolina
Twelve Months Ended December 31, 2011
Requested Effective Date
January 01, 2013
Test Period Data:
Retail Electric Rate Base
Return on Rate Base
Return on Common Equity
Requested in Application:
Annual Revenue Increase
$151.5 Million, 6.61%
Return on Rate Base
Return on Common Equity
Anticipated Net Income Impact
Approximately $50 Million
100 basis points equals approximately $41 Million in Revenue
Capital Structure and Cost of Capital (Requested in Application):
Gross of Tax
Note: $100,000 of preferred stock is reflected in total
Components of Requested Electric Revenue Increase (millions):
Reliability/Load Driven Investment
Reliability Related O&M
Taxes Other than Income
Impact of Coal Plant Retirements/Replacement Generation
Total Requested Increase
SAFE HARBOR STATEMENT
Statements included in this press release which are not statements of historical fact are intended to be, and are hereby identified as, "forward-looking statements" for purposes of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, but are not limited to, statements concerning key earnings drivers, customer growth, environmental regulations and expenditures, leverage ratio, projections for pension fund contributions, financing activities, access to sources of capital, impacts of the adoption of new accounting rules and estimated construction and other expenditures. In some cases, forward-looking statements can be identified by terminology such as "may," "will," "could," "should," "expects," "forecasts," "plans," "anticipates," "believes," "estimates," "projects," "predicts," "potential" or "continue" or the negative of these terms or other similar terminology. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties, and that actual results could differ materially from those indicated by such forward-looking statements. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include, but are not limited to, the following: (1) the information is of a preliminary nature and may be subject to further and/or continuing review and adjustment; (2) regulatory actions, particularly changes in rate regulation, regulations governing electric grid reliability, environmental regulations, and actions affecting the construction of new nuclear units; (3) current and future litigation; (4) changes in the economy, especially in areas served by subsidiaries of SCANA; (5) the impact of competition from other energy suppliers, including competition from alternate fuels in industrial markets; (6) growth opportunities for SCANA's regulated and diversified subsidiaries; (7) the results of short- and long-term financing efforts, including prospects for obtaining access to capital markets and other sources of liquidity; (8) changes in SCANA's or its subsidiaries' accounting rules and accounting policies; (9) the effects of weather, including drought, especially in areas where the generation and transmission facilities of SCANA and its subsidiaries (the Company) are located and in areas served by SCANA's subsidiaries; (10) payment and performance by counterparties and customers as contracted and when due; (11) the results of efforts to license, site, construct and finance facilities for electric generation and transmission; (12) maintaining creditworthy joint owners for SCE&G's new nuclear generation project; (13) the ability of suppliers, both domestic and international, to timely provide the labor, components, parts, tools, equipment and other supplies needed, at agreed upon prices, for our construction program, operations and maintenance; (14) the results of efforts to ensure the physical and cyber security of key assets and processes; (15) the availability of fuels such as coal, natural gas and enriched uranium used to produce electricity; the availability of purchased power and natural gas for distribution; the level and volatility of future market prices for such fuels and purchased power; and the ability to recover the costs for such fuels and purchased power; (16) the availability of skilled and experienced human resources to properly manage, operate, and grow the Company's businesses; (17) labor disputes; (18) performance of SCANA's pension plan assets; (19) changes in taxes; (20) inflation or deflation; (21) compliance with regulations; (22) natural disasters and man-made mishaps that directly affect our operations or the regulations governing them; and (23) the other risks and uncertainties described from time to time in the periodic reports filed by SCANA or SCE&G with the United States Securities and Exchange Commission. The Company disclaims any obligation to update any forward-looking statements.
SOURCE SCANA Corporation