Columbia, SC, Aug. 5, 2008… With coal prices recently soaring to unprecedented levels and the continued volatility of natural gas prices, South Carolina Electric & Gas Co. (SCE&G), principal subsidiary of SCANA Corporation (NYSE: SCG), today filed an application with the South Carolina Public Service Commission (PSC) and the South Carolina Office of Regulatory Staff (ORS) seeking approval for a mid-period adjustment to the fuel component of electric rates.
As a regulated utility, SCE&G is permitted to seek full recovery of costs prudently incurred in purchasing fuel, such as coal and natural gas, to operate its electric generation facilities. Fuel costs currently represent about 25 percent of what a residential customer pays for a kilowatt hour of electricity. These costs are a direct pass-through to customers; SCE&G does not earn a profit on that portion of its rates.
Typically, the PSC reviews SCE&G’s electric fuel costs and authorizes the company to adjust electric rates annually – usually in May – to reflect those costs. This is the first time ever the company has sought approval for a mid-period fuel cost adjustment to electric rates.
“About 65 percent of our electricity is generated through the burning of coal,” said SCE&G President Kevin Marsh. “Recently, transportation and supply pressures, combined with growing international demand and the declining value of the U.S. dollar, have spurred dramatic increases in the price of coal. When we were forecasting for future needs at the time the current fuel factors were established earlier this spring, a ton of coal was priced in the mid-$80 range. We’re now seeing sustained prices in the spot markets in excess of $150 per ton – an increase of more than 75 percent.”
To help level out the impact on customers, the company is seeking to implement the adjustment in two phases:
- Beginning with the first billing cycle in November
- Residential customers would see a 6.06 percent increase; the monthly electric bill of a 1,000-kwh residential customer would increase $6.53 going from $107.67 to $114.20.
- Commercial customers would see an average increase of 7.37 percent.
- Industrial customers would see an average increase of 12.05 percent.
- Beginning with the first billing cycle of January 2009
- Residential customers would see a 5.72 percent increase; the monthly electric bill of a 1,000-kwh residential customer would increase $6.53 going from $114.20 to $120.73.
- Commercial customers would see an average increase of 6.86 percent.
- Industrial customers would see an average increase of 10.75 percent.
“We’re very sensitive to the impact fuel costs have on our customers,” said Marsh. “We make every reasonable effort to minimize our fuel costs. We have highly trained people in place who are focused on obtaining reliable supplies of fuel at the lowest possible cost to our customers. Unfortunately, though, global energy prices are rising sharply, which is beyond our control.”
SCE&G is a regulated public utility engaged in the generation, transmission, distribution and sale of electricity to approximately 646,000 customers in South Carolina. The company also provides natural gas service to approximately 303,000 customers throughout the state. Information about SCE&G is available on the company’s web site at www.sceg.com.
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 web site at www.scana.com.