Senate panel advances electric rate‑stabilization plan after wide debate over consumer safeguards

The Senate Judiciary subcommittee voted to advance S.446, a bill that would create an electric rate‑stabilization mechanism allowing utilities to true up authorized returns more frequently than under a traditional rate case. The panel approved a motion to move the bill toward full committee by voice vote after extended testimony and questioning.

The measure would allow utilities that elect into the mechanism to recover certain costs on an annual schedule tied to an established return‑on‑equity band, with a mandatory full rate proceeding every five years to reset broader parameters such as depreciation and cost‑of‑capital assumptions. Proponents said the change reduces regulatory lag and smooths smaller annual adjustments; critics said the approach risks shifting more development and construction risk onto residential and small business customers unless tighter guardrails are added.

Key testimony and debate

Andrew Bateman, executive director of the Office of Regulatory Staff (ORS), described how the existing Natural Gas Rate Stabilization Act operates for gas utilities that opt in and outlined protections proposed for the electric version: quarterly or monthly monitoring reports, ORS review, annual true‑ups confined to prudently incurred costs and the return band, and a required full rate proceeding at least every five years. Bateman noted that the ORS would still prepare reports and that intervenors could file documentary evidence in the annual reviews.

Utility witnesses and supporters argued the mechanism reduces the cost of capital over time by reducing regulatory lag and enabling utilities to collect prudently incurred capital earlier, which can lower long‑term costs through the time value of money and by reducing borrowing spreads. Supporters cited examples from other states and existing gas RSA experience.

Opponents and consumer advocates raised concerns

Consumer groups, small‑business advocates and some witnesses told the committee that formula rate approaches can produce steady increases in bills over time and may reward aggressive capital spending. John Brooker of Conservation Voters of South Carolina said the proposal risks “deprioritizing” efficiency and clean energy and would make the allowed return more like a guaranteed return than a fair opportunity to earn one. The South Carolina Small Business Chamber of Commerce and AARP representatives urged that any expedited or annual mechanism preserve full intervenor rights, discovery, and explicit caps or triggers so customers are not exposed to unchecked year‑to‑year increases.

Comparisons and precedents

Witnesses and committee staff noted that electric rate‑stabilization or formula mechanisms exist in other states — examples cited included Arkansas, Louisiana, Mississippi and Alabama — and that South Carolina already has a gas RSA used by Piedmont and Dominion's gas utility. Several witnesses pointed to Arkansas as an example where residential rates rose substantially under formula mechanisms, and consumer advocates urged caution and more concrete protections in drafting.

Committee action

After debate and questioning, members voted to advance S.446 to the full committee by voice. Committee members and witnesses agreed to continue work on drafting and to try to clarify intervenor procedures, prudency review thresholds, construction‑work‑in‑progress rules and whether a numerical cap or glidepath should be included in the statute.

Next steps

The chairman indicated the subcommittee would send S.446 forward while staff and stakeholders continue negotiating clarifying language about transparency, discovery and post‑construction prudency review. Several witnesses asked for explicit statutory language guaranteeing intervenor access to discovery and to require ORS and the PSC to provide notice and expedited procedures for any annual true‑up filings.