Staff Report
Published May 5, 2010

SCANA subsidiary S.C. Electric & Gas Co. signed a stipulation with the S.C. Office of Regulatory Staff on Monday that would reduce the company’s request for a 9.52% electric rate increase to 6.55%, the company said.

If approved, the stipulation would:

• Lower SCE&G’s proposed return on common equity from 11.6% to 10.7%.
• Support a 12-month pilot of a weather normalization mechanism for electric rates.
• Provide for the issuance of an approximate $25 million credit to electric customers.

The stipulation, without consideration of any other proposed adjustments, effectively reduces SCE&G’s proposed increase to 6.55%. The Public Service Commission of South Carolina is slated to hold a public hearing on SCE&G’s rate request beginning May 24.

The commission must approve the stipulation before the company may issue the credit. Under the stipulation, the implementation of a pilot weather normalization program will adjust customers' electric bills to reflect normal, rather than actual, weather conditions. “Normal” weather is based on a 15-year average of temperatures. The program is intended to protect customers from large spikes in their electric bills during periods of unseasonably hot and cold weather.

“We are not looking to gain a financial advantage at the expense of our customers from abnormal weather like we experienced this past winter,” said SCE&G President Kevin Marsh. “Shortly after we gave notice of our pending increase request with the Public Service Commission, our service territory experienced one of the coldest winters on record. As a result, customer usage was up significantly compared to the same time period last year, which meant much higher electric bills for most SCE&G customers. Since that time we have been looking for a way to provide some relief to our customers and protect them from spikes in their bills due to extreme weather.”

If the proposed weather normalization mechanism had been in place since the beginning of 2010, SCE&G estimates its electric customers would have saved approximately $22.5 million in the first three months of the year.

Marsh said if the stipulation is approved, including the weather normalization mechanism, SCE&G will provide its electric customers with a $25 million credit. The company is still working through details of how the credit would be applied.

“Both SCE&G and the ORS recognize the struggles customers have had this past winter, not only due to the economy, but also from prolonged cold weather,” Marsh said. “We are pleased that we were able to work with the ORS to craft this solution. Our customers could use some relief, and the $25 million will certainly be helpful.”