Columbia, SC, April 26, 2005 - South Carolina Electric & Gas Company (SCE&G), principal subsidiary of SCANA Corporation (NYSE:SCG), will file an application today with the Public Service Commission of South Carolina (PSC) requesting an overall increase of 7.09 percent, or approximately $28 million, in the company's retail natural gas base rates.
The rate increase request is largely associated with recovering costs associated with expanding and operating SCE&G's natural gas infrastructure, costs that are necessary to ensure safe, reliable and efficient service to its customers.
"It's been 16 years since we've sought an increase in retail natural gas base rates. Since that time we've experienced increasing capital and operating costs that make it necessary for us to seek rate recovery. While we've tried to delay the impact of a natural gas rate increase for as long as we could, we must seek recovery of these costs at this time," said SCE&G President Neville O. Lorick.
The overall 7.09 percent increase breaks down as follows: 13.85 percent for residential; 5.57 percent for small and medium commercial; and 8.13 percent for large commercial and industrial. The percentage increase allocated to residential customers is higher because the cost to serve these customers is higher.
When considering the impact on residential customers, Lorick said it's important to understand that there is no such thing as an "average" customer. "Everyone is different," he said. "Some customers have appliances such as water heaters and stoves that run on natural gas year round, others may only use natural gas to heat their homes. Some customers have larger homes with families, others may live alone in smaller homes or apartments. Based on these different types of customers, and averaging out the impact of this increase on monthly basis, you could expect to see customer bills increase by about $7.50 a month, going from about $52 to $59.50 a month."
Lorick said SCE&G's cost of doing business has increased significantly over the last 16 years, from ongoing operations and maintenance expenses to the cost of installing new pipelines to meet growing demand to higher property taxes. "We've been adding to this infrastructure at current prices, but recovering costs at 1989 rates," he said.
Since SCE&G's last natural gas rate case, the company's gas distribution system has grown by 46 percent, from 4,667 miles to 6,800 miles. Customers have increased by 39 percent, from 203,000 to 282,000. At the same time, property taxes have grown by $9 million and operation and maintenance costs have risen by $25 million.
"There is never a good time to increase rates, and that's part of the reason why we haven't filed a gas base rate case in so long. Although we're allowed to earn a return on common equity of 12.25 percent, based on an adjusted test year ended December 31, 2004, we earned a negative return of 1.11 percent. Earning a reasonable return is important not only to the financial health of our company, but also to our ability to make additional capital investments necessary to support future growth and ongoing economic development in our state."
The requested increase is based upon a 9.19 percent overall return on rate base, including an 11.75 percent return on common equity, and would produce approximately $28 million in additional annual revenues based on the adjusted test year.
Public hearings on SCE&G's application are expected to be held by the PSC in September 2005. If approved, the new rates would go into effect in November 2005.
For additional information on SCE&G's proposed rate request, visit learnmore.sceg.com.
SCE&G is engaged in the generation, transmission, distribution and sale of electricity to more than 585,000 customers in 24 counties in portions of central, southern and southwestern South Carolina. The company also provides natural gas service to approximately 282,000 customers in 34 counties in the state.
SCANA Corporation, a Fortune 500 company headquartered in Columbia, SC, is an energy-based holding company principally engaged, through subsidiaries, in electric and natural gas utility operations and other energy-related businesses. Information about SCANA and its businesses is available on the Company's website at www.scana.com.
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Statements included in this press release which are not statements of historical fact are intended to be, and are hereby identified as, "forward-looking statements" for purposes of the safe harbor provided by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Readers are cautioned that any such forward looking statements are not guarantees of future performance and involve a number of risks and uncertainties, and that actual results could differ materially from those indicated by such forward-looking statements. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include, but are not limited to, the following: (1) that the information is of a preliminary nature and may be subject to further and/or continuing review and adjustment, (2) regulatory actions or changes in the utility and non-utility regulatory environment, (3) current and future litigation, (4) changes in the economy, especially in areas served by the Company's subsidiaries, (5) the impact of competition from other energy suppliers, including competition from alternate fuels in industrial interruptible markets, (6) growth opportunities for the Company's regulated and diversified subsidiaries, (7) the results of financing efforts, (8) changes in the Company's accounting policies, (9) weather conditions, especially in areas served by the Company's subsidiaries, (10) performance of the Company's pension plan assets, (11) inflation, (12) changes in environmental regulations, (13) volatility in commodity natural gas markets and (14) the other risks and uncertainties described from time to time in the Company's periodic reports filed with the United States Securities and Exchange Commission. The Company disclaims any obligation to update any forward-looking statements.