Residents bothered by Carolina Water Service coming back every couple of years to ask for higher rates probably won’t like what the utility plans.
Carolina Water wants to change rates annually, without a public hearing or notice until the new rates are set.
“It would be unique for a water utility to do this,” said S.C. Sen. Wes Climer. The approach is used for natural gas utilities, Climer said.
Essentially the utility could recoup costs across the system where customers don’t use a base amount of water, he said. Climer has concerns about leaks, where customers could end up paying for a utility error.
“(Carolina Water) proposes to adjust its water and wastewater rates annually,” the utility wrote in its request, “to reflect changes in the company’s actual purchased water and wastewater treatment expenses resulting from changes in third party providers’ rates.”
The plan may seem familiar. Last November Carolina Water applied for a rate increase that would’ve raised revenue statewide by $4.5 million. In May the South Carolina Public Service Commission approved what would net $2.9 million in new revenue. Water rates locally increased more than 13 percent, sewer rates by 14-24 percent.
The proposed new method of changing rates annually was part of that request, but the state commission pulled it out as a separate decision.
Climer and York County leaders sent letters to the service commission. If the change is to be considered, Climer said, the public should get a say.
“Absolutely customers should get notice here,” he said. “It absolutely should go through the full hearing process.”
The service commission received a letter Dec. 5 from York County attorney Michael Kendree. The letter asks for a public hearing.
“As the proposed annual rate adjustment mechanisms could impact the rates charged to present customers, York County believes the county customers affected by this proposal deserve to be notified of the requested change.”
Climer’s letter, dated Nov. 28, states the typical rate case hearing process is a minimum measure the state should require.
“Given Carolina Water Service’s well-earned disrepute,” Climer wrote, “I have grave concerns about subjecting the utility’s customers to any rate mechanism that relies upon the company acting in good faith. At a minimum, customers deserve adequate notice of the proposed change and the public interest would be well-served by subjecting the filing to the scrutiny of the commission’s hearing process.”
During the rate increase request approved in May, hearings were held including one in Lake Wylie. Residents argued costs already are too high, water quality is poor and customer service lacking. Several also expressed frustration with Carolina Water coming back so often for rate increases.
“Every two years we go through this, just like clockwork,” Lake Wylie resident Don Long told company officials at a December 2017 public meeting.
Counting the current request, state records show Carolina Water applied for 13 rate increases — nearly one every other year — since 1989. Those requests include applications in 2011, 2013, 2015 and 2017.
Company official Robert Yanity told Long at the meeting last December, the resident is right. The utility contends smaller increases to recoup costs more often are preferable to larger, delayed ones.
“That’s part of our model,” Yanity told Lake Wylie residents, “to come in more regularly with relatively smaller increases, compared to coming in after maybe five years and doubling your rate.”
More than 9,700 of the roughly 28,000 Carolina Water customers statewide, live in York County. The utility covers most of Lake Wylie. It covers small pockets near Fort Mill and Rock Hill too.
Carolina Water applied with the service commission for the new way of adjusting rates on Nov. 14. The utility wants what it calls “annual rate adjustment mechanisms.” Carolina Water asked for the change without notice or hearing. The utility plans to implement the change early next year, asking for a service commission decision by Jan. 16, 2019.
The new setup wouldn’t change the utility’s base charge, but would impact the annual charge on water per gallons used. Carolina Water argues tariffs are allowed without a hearing when they don’t impact the entire rate structure.
The utility would file proposed rates by March 1 of each year. Those rates would reflect changes in wholesale or other third party rates impacting water and sewer costs. The service commission and state Office of Regulatory Staff would review and audit the proposed changes in April, then issue an order allowing them. The utility would then inform customers of the changes May 1, with rates changing June 1.
Carolina Water buys water from 13 providers, and wastewater treatment services from six more. The utility claims wholesale rate increases from 13 of those 19 providers since mid-2017, increasing overall wholesale costs by more than $1 million annually.
“The requested relief will assist (Carolina Water) in providing reasonable and adequate service to its customers, recovering its actual purchased water and wastewater treatment expenses on a timely basis, eliminating or deferring the need for new rate cases due to purchased service expenses and preserving its financial integrity,” the utility wrote in its request.
Carolina Water has been busy since its rate increase request this time last year. In that time the utility applied for a franchise agreement to continue serving York County, requested a name change, issued a report on the Tax Cuts and Jobs Act impact on utility finances and filed for changes on pumping interceptor tanks, hydrant meters and a satellite sewer system in Columbia.
On Dec. 5, the commission voted to hold off on approving a name change from Carolina Water Service to Blue Granite Water Company until the utility files notice with customers including any change to billing, location, contacts and the like. In its Nov. 21 request, Carolina Water anticipated a Jan. 5, 2019 change. The utility stated notice would be sent to customers on two billing cycles.
Carolina Water is organized in Delaware but does business in South Carolina.