SC utility was told it couldn’t raise rates. Now its case is headed to Supreme Court

A South Carolina utility is taking its case for raising customers’ rates to the highest court in the state.

Blue Granite Water Company is asking the S.C. Supreme Court to overturn a regulatory decision last year that denied the company the option of increasing water rates on customers in the Midlands and Upstate.

After the company and state regulators deliver their arguments to the court on Tuesday in Columbia, the decision about customers’ rates will be in the hands of the five high court justices.

Blue Granite, a private utility that serves 30,000 customers across the state, says in court filings the S.C. Public Service Commission was legally wrong to deny a proposed rate hike after hearings last year, arguing the approved rate does not cover the $23 million in needed improvements and investment the company has already made.

“This erroneous rate treatment effectively disallows the Company’s recovery of approximately $2 million of its purchased service expenses with no finding of imprudence...” Blue Granite argued in a court filing.

Formerly known as Carolina Water Service, the company requested regulatory approval for a rate increase of up to 56% on some customers. For residential customers, that would have meant paying an estimated $25 to $35 more a month for water and $26 to $36 for sewer.

Instead, the S.C. Public Service Commission in April of 2020 allowed only a 12% to 24% increase — a change of $2 to $6 per month on water and $12 to $15 on sewer, depending on the service area.

The company serves several communities in Lexington and Richland counties, as well as communities near Rock Hill in York County.

Blue Granite’s filing also argues the approved return on equity was lower than that recommended by the S.C. Office of Regulatory Staff and the state’s consumer advocate, which also weighed in before the commission’s decision last April.

“The Commission’s ROE determination must fall within a range of reasonable ROEs that are supported by the evidence in the record, not below the range,” it said.

Likewise, the decision to deny recovery of storm costs is “yet another example of erroneous Commission decision-making intended to punish the Company,” Blue Granite argues in its filing.

“The evidence in the record demonstrates that the storm cost level established by the Commission would not cover and does not reflect the storm costs recently experienced by the Company,” it said. “The Commission, as it did frequently in this case, chose the storm cost level simply because it was the ‘lowest offer on the table,’ not because it is the result of reasoned decision-making.”

Blue Granite is also asking the court to allow the company to recoup the cost of legal expenses and setting up a new headquarters after it moved from West Columbia to Greenville.

The Office of Regulatory Staff opposed the company’s request to pay for the cost of the office move in its filing with the court.

“The substantial evidence placed in the record indicated that Blue Granite’s decision to move its offices were attributable to adverse legacy brand issues caused by the utility and was part of its rebranding,” ORS said in its filing. “Notably, the Utility previously committed that it would not seek recovery from its customers of costs associated with rebranding efforts...”

Also under the commission’s order, the company can only require customers to pay for 10% of the cost of water loss due to leaks.

The Office of Regulatory Staff said the Public Service Commission’s findings were reasonable and balanced the interests of the company with that of its customers.

“Commission found that Blue Granite’s initially proposed approach of recovering all non-revenue water from customers was unreasonable, unbeneficial to the customer, and inadequately incentivized Blue Granite to take steps to reduce non-revenue water losses,” ORS said in its Supreme Court filing.

Blue Granite has tried to get out from under the commission’s ruling before. Last August, the company said it would raise rates beginning in September while the company appealed the commission’s ruling. The commission later moved to block that rate hike from going into effect.