The state agency that represents the public in utility issues said the Electric Weather Normalization Adjustment should stop with December’s bills. The report serves as a recommendation to the Public Service Commission. There is no timetable on a decision.
The program, approved in 2010 after an unusually cold winter, was touted as protecting customers from spikes in their bills during extreme weather, by lowering electricity rates during months when temperatures are hotter or colder than usual. Meanwhile, raising rates during milder-than-normal temperatures protected the utility.
It was designed “to take volatility out of customers’ bills,” said utility spokesman Eric Boomhower. “The fact that it stabilizes our operating revenues is a benefit, but not its purpose.”
In theory, it’s a good idea, said Dukes Scott, the executive director of Regulatory Staff, which supported the program as part of a 2010 agreement with the utility on a rate increase.
“But it’s so complicated, if someone brings in their monthly bill and says, ‘Is this bill correct?’ we can’t tell them,” he said.
It’s worrisome, he said, that only the utility can make and verify the calculations.
SCE&G uses 19 different equations to calculate the adjustments for customers, with each group having 20 separate billing cycles. So customers are billed differently even within the same category. In all, nearly 22,000 weather-based adjustment factors were applied to bills between the launch in August 2010 and August 2013, Regulatory Staff reported.
Boomhower recognized that the “formula is complex and complicated.”
However, he said, customers overall have paid $25 million less over the past three years than what they would have without the adjustments.
Scott said his agency hasn’t verified that number. Regulatory Staff should be able to determine the program’s overall affect as the process goes forward, but it won’t be able to tell individual customers whether they saved or spent more money because of the adjustments, he said.
Beyond making bills nearly impossible to understand, the program appears to discourage conservation, according to the report.
“When the customer has considerable difficulty knowing the exact price, the link between price and quantity consumed is broken,” it reads. “This price distortion can lead to frustration among those customers who have made energy efficiency upgrades in their homes and see weather-related price increases despite a decrease in their energy usage.”
The program’s usefulness was called into question last year by AARP, as it protested another rate increase. The report issued Friday is part of an agreement with SCE&G over evaluating what was launched as a pilot program.
Boomhower says the utility will work with Regulatory Staff in the coming weeks as it decides how to proceed.
“We are thrilled with ORS’ recommendation,” said AARP state director Teresa Arnold. “We had a lot of members calling to complain. They didn’t think it was fair.” Some who kept their own billing records believe the adjustments benefited only SCE&G, not them, she said.