Your power bill is going UP
By John Temple Ligon Temple@TheColumbiaStar.com

In early February, SCANA suggested to the S.C. Public Service Commission an electrical base rate increase request was in the works. The new rates weren't expected to kick in until late 2007 or early 2008. The expected request was assumed to come across as a 4% increase.

In mid- June, SCANA formally filed an application with the Public Service Commission for a 6.75% rate increase. The SCANA annual report to its shareholders and the 10K to the Securities & Exchange Commission for the year 2006 says the company's year- end return on common equity was 10.9%, a cut above the year's targeted 10.7% for electric power. Its average return for the year was 11.2%, but it's the year- end number that matters with the Public Service Commission. In 2005, SCANA achieved a 12% return on common equity, and in 2001, 24.6%.

The targeted return on common equity in 2006 for natural gas operations was 10.25%, but 50 basis points either way was to be tolerated without any shift in rates. In other words, a rise to 10.75% would be all right, as would a fall to 9.75%.

Comparing the year's projected returns on common equity and the actual return, there appears to be little justification for a rate hike based on that indicator alone.

Looking at incomes for electric power and gas operations, there could be even less need for a rate hike. Electric utility operations for 2006 had an operating income of $456 million, a 52% increase over 2005's $300 million.

The gas operating income came to $114 million, which is almost 19% over 2005's $96 million. And with an increase in gas operating profits of 19%, SCANA wants an increase of 1.33% in its gas rates.

But the net income, the bottom line for SCANA after other expenses and interest charges and losses from other equity investments are figured in, shows only $310 million, down over 3% from 2005's $320 million. Making less in 2006 than in 2005 begins to beg for a rate hike.

SCANA is huge, S.C.'s largest company headquartered in the state. Its 2006 balance sheet cites assets totaling almost $10 billion. At the end of the year, SCANA had almost 117 million common shares outstanding.

At year end, a common share of SCANA stock was priced at $40.62, and the year end dividend yield was 4.1%. The average dividend yield of all S&P 500 stocks was 1.55%; for the Dow Jones Industrial Average, 2.41%. Paying out a 4.1% dividend to its shareholders when the S&P 500 averages 1.55% doesn't help the argument for a rate hike.

SCANA's proposed 6.75% electric rate increase is a combination as follows: 7.49% for residences; 5.83% for small businesses; 6.87% for medium businesses; and 5.96% for large commercial/ industrial customers.

If a residential customer uses 1,000 kilowatthours of electric power, the rate increase would trigger a $7.62 increase in the monthly bill.

A SCANA spokesman reported that since 2004, SCANA has put $107 million into clean air technologies at its coal-fired generating plants. And also since 2004, the company has spent $314 million building transmission and distribution infrastructure.

At least SCANA is not complaining about the cost of its move to a new headquarters campus on its land near I- 77 and the Congaree River, deserting downtown and setting itself up for a sale.