Reverse Robin Hoods

Our State legislature has sat on the sidelines for too long as the utility companies have been permitted to legally rob their consumers for the last six years. Thanks to the S.C. Base Load Review Act, our legislature has placed the public in a very vulnerable position of economic servitude to the public utilities as they expand. In other words, multiple record SCANA rate hikes plus record high rate margins , and plus continued record profits (over 30 percent increase from 2009 to 2013 in net income) equals one big preventable travesty placed upon the public. The state legislature cannot continue to facilitate SCANA’s drive to achieve unprecedented earnings at the expense of the public. After all, utilities are supposed to be a regulated monopoly.

Our legislature simply cannot justify allowing these monopolies to continually record higher earnings while consumers are forced to pay record excessive rates. To illustrate, SCANA has subjected its subscribers to an average rate hike of more than $200 per year for the last six years (note The State’s related article on 10/30/14) without having any accountability to reduce their costs. On Oct. 30, SCANA released this self-damning statement: “Electric margins [re: high profit rates] continue to increase as expected due to customer growth and financing cost recovery through the Base Load Review Act.”

Indeed, SCANA is allowed to harpoon their customers in their wallets while generating record profits because the aforementioned Act protects the utilities from their failures to control costs (ex: continued nuclear plant delays) at the expense of the consumers.

A remedy I suggest is an amendment to the Base Load Review Act which would hold the utility monopolies to cost containment accountabilities without inhibiting service. Benchmarks should be mandated in the amendment to ensure utilities reduce costs via increased productivity. For example, one utility recently saw an opportunity to improve field-service by 30 percent by benchmarking the best practices of their best contractors. Another utility has reduced costs by more than $100 million over two years by streamlining their processes and organizational structure.

Additionally, let’s ensure utilities annually complete cost and performance reviews of their various service territories and equipment. Utilities should always be in a position to quickly leverage the ever changing fuel markets and reward its customers with the least costly and must plentiful energy. How about, also, holding the utility vendors monetarily accountable for failed performance? Let’s ensure the Public Service Commission does its public service by benchmarking the most efficient and cost effective national utilities and then holding our state’s utilities to meet those benchmarks. In other words, the utilities can do a better job of keeping costs and rates down if we properly motivate them. It’s a shame it is going to take the state legislators to force them to do it.

In true “let them eat cake” fashion, the vice chairman of the S.C. Public Service Commission was quoted in 2012 as saying, “The ratepayer will have to foot the bill [of rising expansions costs]” instead of emphasizing requiring utilities to do due diligence in holding costs down. Why should the consumer bare all of the unwarranted pain of the utilities’ cost overruns? I bet we could get massive cost and rate reductions by having the utilities tie salaried bonuses and salary pay raises to holding rate increases to reasonable levels. Obviously, the utility companies require incentives to prioritize the customer service. Please encourage your state legislators (fortunately Fairfield has two good representatives) to give the utility industry the incentives to keep rates low. Let’s produce legislation which will motivate the utilities to become more efficient and, thus, less costly.

Speak Your Mind

*