Agency to evaluate new rates

The South Carolina Public Service Commission will meet today in Columbia on a request by some state legislators that it reconsider the recent rate increases for Graniteville and Vaucluse water customers.

Charlie Terreni, a PSC spokesman, said Tuesday that the commission received a letter from state Rep. Roland Smith, R-Warrenville; state Sen. Shane Massey, a Republican whose district includes Aiken; and state Rep. Tom Young, R-Aiken, asking it "to amend its order and adopt a new rate schedule, lower rates."

In response, Mr. Terreni said, "The commission is going to consider this matter tomorrow and decide what steps it can do to determine the extent of the problem and how to mitigate the effects of the rate."

At issue are new water and sewer rates requested by Avondale Mills, the company that runs the Graniteville water system. The new rates were approved by the PSC in June, and the system's 460 customers received their first bills with the increase Friday. Some were hundreds of dollars higher. Many residents called area legislators, demanding that something be done.

On Tuesday, Stephen Felker Jr., the vice president of corporate development for Avondale Mills, said it was the first rate increase for the system since 1981 and that it was necessary because Avondale had been absorbing large losses since it shut down mill operations in the area. He said his company had subsidized $6 million to $7 million for residents in the past decade. When mill operations ceased, he said, the company could no longer afford to absorb such losses.

Mr. Terreni said Avondale reported to the PSC a $475,952 net operating loss for the system from August 2007 to August 2008.

Mr. Felker said he believes his company gave adequate warning to water customers, adding that a notice was sent out six months before the increase took effect and that two public meetings followed.

The rates increased from a subsidized 51 cents per 1,000 gallons for water to $4.50 and from 89 cents per 1,000 gallons for sewer treatment to $6.50. Mr. Felker said the new charge helps his company break even. "This is not something that Avondale is profiting off."

Mr. Terreni said the commission understood that Avondale might have net revenue of $91,965 per year under the new rates.

Mr. Smith said Monday that he wanted to talk to Avondale officials because he had been told by the company that no one would pay more than $71 monthly. Mr. Felker said Tuesday that the $71 figure mentioned was the average bill under the new rate.

He said his company was aware that there would be a significant increase for some, depending on how much water they were using.

Mr. Smith has said that outdoor water usage accounted for much of the increase among those with the highest bills.

Mr. Terreni said PSC might address the amount of water usage by Graniteville water customers. He said that when the PSC approved the higher rates, it did so based on a state guideline of an average water consumption of 6,000 gallons per household per month.

In some cases, usage in Graniteville was much higher, causing the much higher bills, he said.

"The commission bluntly was taken by surprise" by bills of $500 to $700, Mr. Terreni said. "They didn't fully appreciate the range of consumption that may be out there."

But Mr. Felker said his company had provided the PSC with customer records showing past usage. He said a reduction in the new rate would cause the company to lose money again.

"Right now, we're barely at a break even," Mr. Felker said. "Any drop in rates would be a loss and would cause us to be operating at a loss and would fall on the shareholders of Avondale. And that would be counter to the whole purpose of obtaining the rate increase in the first place."

Reach Preston Sparks at (706) 823-3338 or preston.sparks@augustachronicle.com.