AARP South Carolina Testimony - House Utility Ratepayer Protection Committee

AARP South Carolina Testimony
House Utility Ratepayer Protection Committee
September 26, 2017
Coretta D. Bedsole, Associate State Director – Advocacy

Chairman McCoy, Vice Chairman Ott and members of the committee, thank you for the opportunity to present comments on behalf of the 617,000 AARP SC members in our state. We appreciate the many steps this committee has taken to address this matter. As you continue your deliberations I respectfully request that you pay careful attention to how SCE&G’s behavior and the Base Load Review Act have and will impact the 50 plus population and low income seniors.

For quite some time AARP SC members and volunteers have expressed concern both publicly and privately about the VC Summer project and the undue burden the Base Load Review Act places on their financial well-being. The words AARP members’ use most often include why should we pay for a project when we have no real input and the utilities have not been held accountable.

According to the most recent Department of Energy report South Carolina consumers pay higher electric rates than consumers in Georgia, North Carolina, Kentucky, Mississippi, Tennessee, Florida, Virginia, West Virginia, and Alabama. Our state’s electric ratepayers can ill afford to pay these high rates and then assume the financial risk for abandonment of the VC Summer project.
Home energy costs make up a sizable portion of household budgets particularly for older adults. Although they consume approximately as much energy as younger people do, older South Carolinians devote a higher percentage of their total spending to residential energy costs. They spend a greater proportion of their income to heat their homes (this is true even after statistics are adjusted for weather and home size). Too often older adults with low incomes must choose between their energy bills and other basic necessities such as medicine and food. As a result they often up risking their health or comfort. Because of these factors, AARP policy specifically states that “utility rates should reflect prudent use of ratepayer money and fairly distribute costs and savings among consumers, while considering households with lower incomes.” The VC Summer project is a total violation of this policy.
As our members, volunteers and staff became engaged in opposing SCE&G’s numerous rate increases it became clear that consumers and ratepayers were (and are) bearing the brunt of bad decision making, lack of accountability, lack of access to information and a law that does not provide consumers and their advocates with the tools needed to determine if the rate increases are reasonable or even if the project is viable. So now we have a situation where in the words of Speaker Lucas, “ratepayers are the only truly innocent party.”
This why AARP SC supported legislation introduced by Representative Kirkman Finlay to amend the BLRA. Given the most recent developments, we now support a full repeal of the BLRA. Utility law is complex and specialized; therefore, we think the Office of Regulatory Staff is best equipped to deal with this issue, and we support a consumer advocate housed within that agency. We further support changes to the mission of ORS that eliminates the agency’s inherent conflict of interest. ORS should not be responsible for representing the financial integrity of utilities, as stated in the agency’s mission. Their focus should be on ratepayers and the public.
The problems with the law and the project were exceedingly clear in 2015 when Liz Norris, AARP SC’s volunteer state president, and I appeared before the Public Service Commission as protestants. At that time, we asked the PSC to conduct a full review of the VC Summer project. Around that same time, we asked for two night hearings in Charleston and Columbia so that consumers could be heard. The PSC granted one night hearing which was held in Columbia.
Shortly thereafter AARP SC submitted a series of questions to ORS regarding cost shifting, consumer refunds, and demand and need. In November of 2015 the director of auditing for ORS responded in writing to the request. As part of his response he noted “I wish I had better answers to your excellent questions, but the BLRA was carefully written to provide assurance to the utilities and their investors that the projects would be completed. “ This statement seems quite illustrative of the inherent conflict in current law.
During this time AARP staff and other consumer advocates began to have numerous conversations with ORS about how we could become more fully engaged in the process. I would like to take this opportunity to thank the ORS staff for their openness and willingness to respond to questions, provide information and talk about impacts on consumers.
In February 2016 ORS issued a chart on the cumulative SCE&G rate increases approved under the BLRA. This document had a most important notation that it was compiled from publicly available data. AARP questioned this and learned that at various times SEC&G was not providing data and information to ORS as requested and as required by law. We now realize that not only was SCE&G withholding valid information from not only ORS, but government regulators as well.
In March 2016 AARP SC submitted a second letter to ORS asking a series of questions. In a response from Dukes Scott dated June 7, 2016, it was noted that the under the BLRA, the burden of proof is on the party challenging the costs to demonstrate that the changes in the schedules or estimates are the result of imprudence on the part of the utility. Also contained in the Scott letter was a commitment from ORS to continue to work with AARP. Once again this illustrates the problems with the BLRA.
AARP SC continued to protest subsequent rate increases, and in a letter dated August 31, 2016, we made the point that the BLRA does not provide the PSC or ORS with enough oversight to ensure consumers are protected and for determining whether this rate making scheme remains the most economic path towards an affordable energy future for South Carolina.
In October of 2016 AARP decided to launch a print media campaign with an ad in the Post and Couriers. In the fall of 2016 ORS and legal intervenors entered into a fixed price agreement with SCE&G that was approved by the PSC. AARP SC supported the agreement.
Most recently AARP SC was filing paperwork to intervene on the abandonment proceedings on the day SCE&G withdrew their petition. This was the first time we planned to launch a legal intervention because ORS to date had been presenting the same legal concerns as AARP. Our intervention at this point was based on the need to provide more consumer voices in any negotiations related to abandonment.
In April 2017 ORS filed a petition to revoke the confidential treatment of certain items related to the VC Summer project. AARP submitted a letter of support to the PSC. We also engaged our volunteers and over 1300 members signed a petition which we hand delivered to the PSC in May. The petition urged the PSC to enforce the fixed price agreement and hold SCE&G accountable.
Throughout our work on this issue two things became clear – SCE&G ceded responsibility and project management to Westinghouse, a third party that was not covered by the BLRA’s limited oversight protections. Secondly, ORS did a good job given the current law and SCE&G’s lack of transparency and responsiveness.
When this legislative committee was formed, we asked our members once again to share their thoughts. To date we have heard from almost 2,000 members. As you can tell this issue is important to our members. As you deliberate next steps I would like to leave you with some comments from our members who have called, emailed and signed our petitions.
“I live in an old, less than efficient house and a 16% rate increase would mean almost $50 more a month than I currently pay. I’m partially disabled and on a fixed income and that amounts to about 3% of my Social Security check. I can barely make ends meet as it is.”
“Here’s the thing, rates go up, and my income does not. We pay into this over the cost of the plant. When it finally comes on line, will they decrease our rates then? Don’t think so.”
“We already pay over $300 per month in electric and gas. Have to move since my bills have been increasing and my income has not.”
Thank you for your time and attention to this important consumer matter.