Intervening in electric utility rate cases

One of the ways the Coastal Conservation League engages in energy issues is by intervening in electric utility rate cases. Because they are natural monopolies, investor-owned electric utilities must receive approval from the S.C. Public Service Commission of any changes to their rates. As formal intervenors, we work to ensure that ratepayers are not required to pay more than is fair and reasonable. Being an intervenor also gives us a valuable opportunity to negotiate for energy efficiency programs that can reduce pollution and the need for new power plants while saving customers money on their bills. Learn more about our latest efforts below, and check back for updates on future rate cases. 

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We encourage you to speak out in person or virtually during one of the meetings listed below. 

 Opportunities for Customer Comments

Sept. 17 | 1 p.m.
Waccamaw Neck Library
41 St. Paul’s Pl., Pawleys Island, SC 29585
 
Sept. 17 | 6 p.m.
Santee Cooper Auditorium HG
305A Gardner Lacy Rd., Myrtle Beach, SC
29579
 
Sept. 24 | 9 a.m.
VIRTUAL
Register here.  

Registration for the virtual meeting is required. If you plan to speak at the virtual meeting, you must register for the meeting and also register to speak. Santee Cooper uses Webex for virtual public meetings and closed captioning is available. Click here for more information on the Webex platform and how to turn on closed captions.
 
Oct. 8* | 2 p.m.
Santee Cooper Auditorium
305A Gardner Lacy Rd.
Myrtle Beach, SC 29579  

*This will be a meeting of the full Santee Cooper Board and is the final opportunity for oral comments. Customers and other interested parties can make comments in person during this meeting. You can view the meeting online here. 

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Dominion Energy South Carolina 

Dominion Energy South Carolina customers will see a slight increase in their electric rates this fall, but they could have been much higher without the efforts of intervening interest groups like the Coastal Conservation League. In addition to a lower rate increase, we were able to help secure new energy efficiency funding to help low-income customers reduce their energy costs and an optional time-of-use rate that will protect customers’ ability to save money with rooftop solar. Increased energy efficiency and solar will also help to reduce harmful power plant emissions. 

On August 29, the S.C. Public Service Commission (PSC) published a final order approving a comprehensive settlement agreement in Dominion Energy South Carolina’s base rate case. The settlement was filed on July 12, with signatories including Dominion, the S.C. Office of Regulatory Staff, the Coastal Conservation League (CCL), Southern Alliance for Clean Energy (SACE), the South Carolina Energy Users Committee, and the U.S. Department of Defense. Other intervenors, including the S.C. Department of Consumer Affairs, notified the PSC that they would not oppose the settlement. 

Among other things, the approved settlement provides for a 28% lower rate increase than originally sought in the application Dominion submitted on March 1. The authorized $219 million (9.49%) base rate increase went into effect on September 1. Residential customers consuming 1,000 kWh per month are expected to experience a $15.13 (11.40%) increase in their bills. Initially, the company had requested an increase of approximately $303 million, which would have resulted in an increase of $18.86 (14.21%). 

The base rate increase is not inclusive of fuel cost recovery or other rate riders, which are reviewed by the Commission in separate proceedings. Following another settlement agreement approved by the PSC earlier this year, Dominion recently reduced its fuel-cost recovery rate rider, which is the second-largest component of bills after base rates. Residential customers using 1,000 kWh per month have been paying $14.45 (9.88%) less for fuel since May. Subtracting this amount from the $15.13 base rate increase results in an increase of just $0.68 per month. 

On March 18, the Conservation League submitted a petition to intervene in the base rate case in partnership with SACE, with Southern Environmental Law Center (SELC) serving as our legal counsel. We submitted joint testimony on June 5, which included recommendations and supporting evidence from expert witnesses on topics including Dominion’s allowed return on investment, opportunities to reduce costs with improved energy efficiency programs, and proposed changes to the company’s optional time-of-use rates.  

In consultation with the Conservation League and SACE, SELC successfully negotiated for the inclusion of several provisions in the settlement agreement that will provide customers with valuable opportunities to save money through energy efficiency and rooftop solar. These included $3 million in shareholder funds to increase the budget of the existing Neighborhood Energy Efficiency Program, which provides no-cost home weatherization upgrades in low-income areas. The shareholder funds may be used for critical home repairs, which are often needed prior to making energy-saving improvements but are typically not eligible expenditures in utilities’ energy efficiency programs. 

The settlement also calls for Dominion to work with members of the Energy Efficiency Advisory Group, which includes the Conservation League, on developing a new pilot program that specifically targets income-qualified single-family homes with high energy use. The pilot will serve 1,000 customers over a three-year period, with the potential to become an ongoing program. 

For rooftop solar customers, the settlement significantly scaled back the changes Dominion initially proposed in its optional time-of-use rates, which CCL/SACE’s expert witness Tom Beach determined could reduce solar credits by 18% and increase the cost of energy that solar customers bought from Dominion by 81%. One of the most impactful changes Dominion initially proposed would have been shifting back the summertime hours when there are higher peak demand rates, from 2-7 PM to 6-10 PM, when rooftop solar generation is less available. 

Under the approved settlement, summer on-peak periods are now 4-8 PM, and weekends and holidays are not considered on-peak. In addition, a new super off-peak period from 1-5 AM will provide an opportunity for customers to shift some of their usage to times with even lower rates than off-peak periods. This could be particularly beneficial for charging electric vehicles overnight. 

Dominion also agreed to develop and implement an action plan to help customers participate in opportunities stemming from the 2022 Inflation Reduction Act (IRA). Under the IRA, hundreds of billions of dollars in federal funding were made available for qualifying clean energy and energy efficiency projects through a wide variety of grant programs, rebates, and tax credits.  

The fixed basic facilities charge will remain at $9.50 per month under the standard residential service rate. Dominion had initially proposed increasing it to $11. In recent decades, many utilities have been pushing for higher fixed charges to recover more of their calculated fixed service costs through these charges, rather than the volumetric portion of rates. However, high fixed charges reduce the cost-saving potential of energy efficiency improvements and rooftop solar, which are beneficial investments for reducing overall system costs and should be properly incentivized. 

Duke Energy 

In another settlement reached with Duke Energy Carolinas in May, our advocacy helped to limit their proposed rate increase in the Upstate. In that case, we also negotiated the provision of $2 million in shareholder funds for energy efficiency and an expansion of low-income programs that will save customers money while reducing emissions from fossil-fuel power plants. 

Santee Cooper 

Stay tuned for updates in our ongoing efforts to engage on Santee Cooper’s pending base rate hike!  

Santee Cooper staff has proposed a radical restructuring of their residential rates that would go into effect as part of a base rate increase early next year. If approved by their Board, the new rates could result in much higher bills for many families. The proposed residential rates include a higher fixed customer charge and a new demand charge, which is very unusual and problematic (see Table 1).  

Santee Cooper has stated that residential customers will experience an 8.7% rate increase, but is not entirely clear how they calculated this, and it includes overly optimistic assumptions about customers’ ability to change their consumption patterns in response to the new rates. In its analysis, the S.C. Office of Regulatory Staff determined that some customers could see a whopping 36% increase in their average bills throughout the year! In some months, particularly in the winter, it could be even higher. 

Table 1: Santee Cooper’s Current and Proposed Standard Residential Rates 

The mandatory demand charge would make up a large portion of your bill and be based on your highest hour of usage each month during peak demand hours. That means that even if you did a great job conserving energy all month, your bill could go through the roof because of one hour of relatively high usage. For example, if you have family over for the Fourth of July after a visit to the beach, take showers, throw some wet towels in the washer and dryer, let the air conditioning run, cook dinner, and do the dishes, that day alone could stick you with a $170 demand charge on top of your also higher $20 fixed customer charge and all your $/kWh energy charges for the month. 

The League calculated this example based on the $10.03/kW demand charge and the sample demand levels of common appliances provided by Santee Cooper. Note that it does not even include lighting, refrigerators, TVs, or other common types of usage that would add to the 17 kW demand from running all the appliances listed below (see Table 2). Certain households might have less efficient models than Santee Cooper assumed in its sample demands, as well as additional energy-hungry appliances like dehumidifiers, window air conditions, and pool pumps.  

Table 2: Santee Cooper’s List of Common Appliances and Sample Demands 

The idea behind the demand charge is to better align rates with the drivers of service costs, which are much higher during times of peak demand. At the Conservation League, we support well-designed rates that incentivize customers to save energy and shift some of their usage to times of low demand. However, the mandatory demand charge is not a well-designed solution and it could actually disincentive certain conservation behaviors and investments that are beneficial for reducing system costs and environmental impacts. Santee Cooper already offers residential customers an optional time-of-use rate that utilizes a much better approach by avoiding a demand charge and instead offering higher volumetric energy rates during peak hours and lower rates during off-peak hours.  

If a demand charge were implemented, it would make more sense to make it optional and to calculate it based on an average of a customer’s highest usage hours over at least four days. Demand charges also should not apply to holidays or weekends or temperate spring and fall months when demand on the electric system is low.  

The Conservation League also opposes the proposal to increase the fixed customer charge from $19.50 to $20. While this isn’t a particularly large increase, $19.50 is already much higher than it should be and far exceeds the fixed charges required by many other utilities. For example, Dominion Energy South Carolina’s fixed Basic Facilities Charge is $9.50 per month for residential customers. 

This rate hike is the first following a rate freeze that was negotiated in a 2020 settlement related to the failed V.C. Summer nuclear expansion, but it won’t be the last.  

After this proposed base rate increase, Santee Cooper is also planning to update its fuel cost rate adjustment, which could increase bills by an additional 7%. In addition, it will implement another increase to recover certain deferred costs specified in the aforementioned settlement. And it doesn’t end there! With a massive 10-year capital investment plan underway and billions of dollars in additional investments identified in its integrated resource plan, these increases are only the tip of the iceberg.