Auditors Question $1.4 Million in Expenses for SCE&G Rate Hike--Zumba Classes, Single Malt Scotch Among Costs

Free Times
October 31, 2012

BY EVA MOORE

South Carolina Electric & Gas Co. is asking state regulators for permission to raise rates. But auditors with the state Office of Regulatory Staff found some eye-raising expenses in documents provided by SCE&G to show that the rate increase is needed. Among the expenses the auditors called into question: Over $1,200 worth of alcohol at two meetings of the SCANA board, SCE&G’s parent company, at Ruth’s Chris Steak House — including several glasses of Macallan 25 scotch, which runs $50 a glass. (Some opted for the Macallan 18, at $30 a glass; others for the Macallan aged only 12 or 15 years.) The company also included 166 Zumba and body-sculpting classes for employees in its filing. “How does Zumba help SCE&G provide service?” auditors wrote in the notes column of their report. Altogether, Office of Regulatory Staff auditors categorized $1.4 million in expenses as unallowable, including alcohol, advertising costs, gifts and novelty items. SCE&G will now have a chance to challenge those findings as the state Public Service Commission holds hearings on the rate hike. The audit was shared with the media by Frank Knapp, president of the South Carolina Small Business Chamber of Commerce, who is intervening in the rate hike case. He called the findings “appalling and offensive.” “Intentionally including these costs to justify a rate hike demonstrates a blind eye toward their customers’ economic struggles,” Knapp said. “There is nothing wrong with Zumba classes for SCE&G employees but the employees or the company should be paying for them, not the customers.” The Zumba classes are a legitimate part of SCE&G’s employee wellness program, which lowers health care costs, according to spokesman Eric Boomhower. “We have a very comprehensive health and wellness initiative,” he says. “Health care costs are part of what is involved with providing service to our customers.” “Those exercise classes just happen to be a Zumba class,” he adds. Including the alcohol, on the other hand, was absolutely a mistake, says Boomhower. When the company files its financial reports with the state, it’s supposed to code all expenses as either rate-related or shareholder-related. “This was human error,” Boomhower says. “Those are absolutely not costs that should have been coded to the customer side of the ledger.” SCE&G is asking for an average rate increase of 6.61 percent. However, the company is also asking permission to adjust fuel rates ahead of schedule, says Boomhower, passing on some savings to customers. That means the hike it’s requesting would raise the average bill by about 4.85 percent. According to Office of Regulatory Staff director Dukes Scott, the average residential user would pay $141.73 per month under the proposed rates. His agency is charged with balancing consumer interests with economic development and corporate well-being in utility cases. The rate hike is necessary because SCE&G has spent millions to improve reliability and comply with federal regulations, SCE&G’s Boomhower says. “Since our last filing we’ve spent $300 million improving transmission,” he says. That includes trimming trees, and replacing poles and lines. The company also installed a $280 million scrubber at its Wateree station to reduce emissions. The Charleston Post & Courier’s editorial board writes that customers should be “outraged” by the rate hike, given the unallowable expenses — not to mention the fact that SCE&G’s rates are already much higher than those of the other big utilities in the state. Indeed, Knapp points out that SCE&G’s rates are 22 percent higher than Duke Energy, and 28 percent higher than Progress Energy. Knapp has intervened in four previous rate hike cases, and has seen rate hikes cut by as much as 50 percent as a result. “It’s almost like a little game that’s played where the company comes in for much more than they expect,” Knapp says. Boomhower says that’s not a fair characterization. “I don’t think it’s a game,” Boomhower says. “We file for what we feel like we can stand up for,” he says. “Is there some subjectivity to the process? Certainly.” The Public Service Commission holds two more public hearings on the proposed rate hike: In Charleston on Nov. 5; and in Columbia on Tuesday, Nov. 27, 6 p.m., at 101 Executive Center Drive. http://www.free-times.com/index.php?cat=1992912064022708&ShowArticle_ID=11013010124236628

 

Say ‘no’ to SCE&G rate hike

Charleston Post & Courier
Editorial
October 28, 2012

If SCE&G has its way, its average customer will pay $141.73 per month. That’s 42.4 percent more than customers of Duke Energy, 40.6 percent more than customers of Progress Energy and 25.8 percent more than Santee-Cooper customers.

SCE&G customers should be outraged at the disparity. But then they should have been outraged all along. They already pay 35.7 percent more than Duke’s, 34 percent more than Progress’ and 26.1 percent more than Santee-Cooper’s customers.

SCE&G contends that it needs the rate increase because of several situations. At the Wateree Station power plant, a new “scrubber” ($280 million) was brought into service in 2010 to meet federal clean air standards. Nearly $30 million has been spent on other environmental upgrades and projects.

With the downturn in financial markets, SCE&G has incurred additional expenses associated with employee pensions.

And SCE&G wants to add to a storm reserve to help in the event of another Hurricane Hugo.

Still, it is puzzling that SCE&G should need so much more for operations and maintenance than its counterparts.

Maybe the utility needs to economize. If expenses cited by the state’s Office of Regulatory Staff are any indication, there’s room for cost-cutting, and maybe for a change of attitude, too.

Case in point: An audit of SCE&G by the ORS, which serves as the state’s consumer advocate on utilities, found that one member of the board of directors charged a $50 glass of scotch whiskey to the company.

And SCE&G paid $370 for a $37 steak at a Ruth’s Chris Steak House. The ORS says the restaurant made a mistake on the bill, but it’s alarming that SCE&G’s accounting department didn’t question paying $370 for a steak. Even a $37 steak is pretty pricey.

Auditors for ORS caught those two charges by reviewing just a sample of the utility’s expenses. You have to wonder what a top-to-bottom audit might produce — and what it might reveal about the utility’s mindset on budgeting and spending.

SCE&G customers who don’t want to see their already-high bills get higher can send a loud message to the S.C. Public Service Commission, which must approve or deny the request.

The PSC has scheduled three public hearings across the state to gather public input. On Nov. 5, the hearing will be at 6 p.m. in Charleston at the International Longshoremen’s Association Local 1422 on Morrison Drive.

History shows that people can make a difference by speaking up in a night hearing. In 2010, after catching considerable flak from understandably alarmed customers, SCE&G dropped its initial proposal for a boost in electricity rates from 9.52 percent to 6.55 percent over one year. Then it dropped its proposal to 4.88 percent — over three years.

Writing letters of protest helps, but the ORS says commissioners do not see those letters. They do pay heed when customers speak out in person.

The ORS is still determining what it will recommend to the PSC. It will definitely protest part of the rate increase request, and it might well protest a significant portion of the request.

Other entities expected to address the rate hike include AARP, industrial customers, the Navy, Walmart and the South Carolina Small Business Chamber of Commerce, which described SCE&G’s rationale for a rate hike as “appalling and offensive.”

Consumers should be advised that SCE&G also is likely to portray itself as the good guy by proposing a reduction in fuel costs to customers. But the fact is that state regulations dictate that the reduction would happen regardless of whether a rate hike is approved, according to the ORS.

SCE&G’s ability to continue providing electricity is vital to our state’s citizens and to its economic future. But it’s difficult to imagine that the utility can justify a rate scale that tops others by 40 percent and more.

If the PSC can rein them in, well, we’d drink to that — though with something less expensive than a $50 glass of scotch.

http://www.postandcourier.com/article/20121028/PC1002/121029273/1021/say-no-to-sceg-rate-hike

SCE&G asks customers to pay for employee Zumba classes, expensive dining and alcohol for SCANA Board

                                      Expenses called “Appalling and Offensive”

Columbia, SC—With many South Carolinians still struggling to simply put food on the table and small businesses trying to keep their doors open, South Carolina Electric & Gas (SCE&G) wants its 668,000 customers to pay an average 6.6% increase in electricity rates.  SCE&G justifies its need for an increase in revenue in part because of “Zumba and body sculpt classes” for its employees as well as dinner and drinks at an expensive restaurant for SCANA Board members.  This public information was released today by the South Carolina Small Business Chamber of Commerce that opposes the rate increase.

On June 29, 2012, SCE&G filed for a general rate hike that calls for residential customers to pay 7.35% more for electricity while businesses would pay 4.19% to 6% higher rates.  The new rates on their own would bring in about an additional $151 million to the company.  SCANA, parent company of SCE&G, reported a 29% increase in earnings to $72 million in the second quarter this year compared to last year.

The documents provided to the S.C. Office of Regulatory Staff (ORS) to justify the rate hike show that SCE&G paid nearly $3200 for 166 “Zumba and body sculp” classes for employees from a private trainer in 2011.  This company expense was just part of the $1.4 million in unallowable expenses found by the ORS.  SCE&G also wants its customers to pick up the tab for dinners and drinks at Ruth’s Chris Steak House in Columbia for the SCANA Board members.  Those bills showed $593 of liquor at a January 2011 dinner and a $643 alcohol tab at the same restaurant in August 2011.  Included in those drink charges were four Macallan 25 Scotches at $50 each and five $56-bottles of wine.

“Asking the SCE&G customers to pay for Zumba classes and alcohol is appalling and offensive,” said Frank Knapp, Jr., president and CEO of the South Carolina Small Business Chamber of Commerce.  Mr. Knapp has formerly intervened in the SCE&G rate case as a private customer as he has done four times before.

“While these costs are small compared to the total revenue sought by SCE&G,” Knapp continued, “the company knows that they are absolutely unallowable expenses to be included in a rate case.  Several years ago SCE&G tried to include the cost of massages and ORS rightfully threw that out.”

“Intentionally including these costs to justify a rate hike demonstrates a blind-eye toward their customers’ economic struggles,” said Knapp.  “Just going out for a family dinner is out of reach for many SCE&G customers because they have so many other bills they must pay, like the electric bill, which for SCE&G residential customers is already 22% higher than Duke customers and 28% more than Progress Energy customers.”

Knapp added, “Every unnecessary dollar paid by a residential customer to SCE&G is a dollar that won’t be spent in a local small business to help grow the economy.  And every unnecessary dollar paid by a small business to SCE&G is a dollar that can’t be used for paying higher wages to workers.  This issue is not just about keeping SCE&G financially healthy.  It’s about how to do that without hurting the state’s economy by asking consumers to pay more than is absolutely necessary.”

At the rate hearing set for November 27, Mr. Knapp will also challenge SCE&G’s rate hike request for a much higher Return on Equity (ROE) than the rate Duke Power currently has.  “SCANA is a profitable company because our regulators make sure that it is.  Wall Street doesn’t need anywhere near the 10.95% ROE that SCE&G is asking for in order to entice it to buy the company’s paper.  Wouldn’t we all like to get even 10% return on our investments,” asked Mr. Knapp.

(Supporting documents and Mr. Knapp’s full statement can be found at www.scsbc.org under issues.)

State begins citing businesses under immigration law

GreenvilleOnline.com
October 25, 2012

Written by Tim Smith, Staff writer

COLUMBIA — Orin McCammon said he had heard something about E-Verify in the news, the federal electronic database used to verify new hires, but didn't think it had anything to do with his business.

That is until a state auditor last month visited Cedars Homeowners Association in North Charleston, where he works, and asked to see paperwork related to the Association's hirings since July.

The Association then became one of the first seven employers in South Carolina to be cited for violating the state's newest tweaks to its immigration law, which requires all new employees, other than farm laborers, ministers and domestic servants, to be verified through the federal database.

First-time violators are placed on probation for a year, must file quarterly reports and have their names posted on the state Labor, Licensing and Regulation website.

"I thought it was something applicable to large organizations," McCammon told GreenvilleOnline.com. "We probably employ one to three people normally."

According to LLR, the agency last year cited 396 businesses across the state for various infractions under the previous version of the state's immigration law. LLR auditors found 171 businesses from January through June who did not use E-Verify but were given a pass under a provision that exempts those caught in the first six months.

Sen. Larry Martin, a Pickens Republican who chairs the Senate Judiciary Committee, said despite the differences in numbers between the old and new law, he believes the new law is doing its job to keep employers honest and chase away illegal immigrants.

"It's really working out pretty well," he said.

But some in the Hispanic community disagree, arguing the law was aimed at a small number of illegal immigrants who mostly left the state anyway because of the Great Recession.

"This law was a waste of my taxpayers' money," said Gregory Torrales, president of the South Carolina Hispanic Leadership Council. "We could have spent that money better. It was feel-good legislation."

Frank Knapp, CEO and president of the South Carolina Small Business Chamber of Commerce, said the law is another burden for the state's small businesses.

"It was an extra burden on small businesses that don't need extra burdens put on them," Knapp said. "The state is making a policy and making small businesses implement the policy for something that politicians wanted. And that just doesn't seem fair at all."

In addition to requiring employers use E-verify for new employees, the new law also creates a state immigration police force that has been up and running since July.

And that unit has run across criminal activity involving immigration laws that has grown, said it's director, Lt. E.C. Johnson.

The unit of six officers spread throughout the state is not after people who might be in the country illegally, Johnson said. Rather, the unit's aim is those participating in criminal activity involving the violation of the state's immigration laws, such as falsifying identification documents or using falsified paperwork to get hired.

The officers respond to requests for investigation by law enforcement and by citizens, Jonson said.

"It has been really busy," he said.

Other provisions of the law have been struck down by the courts. The U.S. Justice Department and the American Civil Liberties Union challenged South Carolina's law last year, which had been modeled after Arizona'a law, arguing it was unconstitutional and would spawn racial profiling.

U.S. District Judge Richard Gergel subsequently blocked three provisions. Those included requirements for immigrants to carry registration papers on them and to allow police to check the status of anyone they stop or arrest for something else, provided they held a reasonable suspicion the immigrants were in the country illegally.

The U.S. Supreme Court subsequently ruled that states have the right to allow status checks, a provision of Arizona's immigration law. But the provisions blocked by Gergel are still on hold pending the outcome of an appeal by the state.

Johnson said there are still 17 other provisions of the law that are valid, plus prior laws that were not challenged.

He said his officers have made "a number of arrests." But Sherri Iacobelli, a spokesman for the state Department of Public Safety, which houses the unit, said the agency will not release exact numbers because of the sensitivity of the issue.

"This unit is so new," she said. "Because of the sensitive nature, because we are working with ICE (U.S. Immigration and Customs Enforcement), we're not going to get into specific numbers. The director is just not comfortable with that at this point."

Johnson said officers have arrested immigrants on both misdemeanors and felonies but all of the charges related to violations of immigration law. He said his unit, which works with ICE, does not respond to complaints that someone suspects a work crew has illegal workers.

"We're not going after anybody who is not involved in criminal activity," he said. "If you're not involved in criminal activity, no matter who you are, you're not going to see us."

Those who suspect a resident is an illegal alien can contact federal immigration authorities, he said. His unit relies on the U.S. Immigration and Customs Enforcement agency solely to determine whether anyone is in the national illegally and consults with the agency in its investigations.

Lawmakers appropriated $1.3 million for the unit last year, which was to pay for Johnson, an administrative assistant and 10 officers, as well as benefits, training and equipment. But the money would only stretch for six officers, Johnson said. He said there is enough work for 10 officers. But Iacobellii said officials want to see what happens over the course of the year before requesting more.

"As it gets up and running, it's going to become more obvious what resources we have as opposed to what we need," she said. "Right now it's still so new. I think that's something the director would consider down the road based on what the need is."

Local law enforcement can already contact ICE if they suspect someone involved in a crime is in the country illegally, Johnson said. His officers are used more to investigate situations in which police suspect violations of the immigration law.

Far from seeing problems associated with illegal immigration dip as a result of the economy, Johnson, who has been in law enforcement more than 30 years, says he believes they have increased.

"Being in law enforcement as long as I have been in law enforcement, I don't really see a difference for anything that has been less," he said. "It's remained consistent and as a matter of fact has grown. I think the activity level of violations has increased somewhat."

Johnson said the violators are not all from one country or even all from Latin America.

"The violations we've seen are multinational," he said. "The violations are not confined to any one region of the world."

Torrales said only about 1 percent of Hispanics in the state are undocumented. And he believes it is a waste of resources to create a state police force to go after immigration violators.

"We aren't Arizona," he said. "We aren't Texas. We're not a border state to another country. While we need immigration reform, we need proper immigration reform and we need it at the national level."

He said rather than spend so much money enforcing a state immigration law, lawmakers could do more good spending the money to create new jobs and assist businesses.

"I'd rather us spend our money on the 250,000 who are unemployed," he said.

Martin said lawmakers are somewhat restricted in what they can do by court rulings. He said federal immigration officials have ended a program used to train local law enforcement to enforce immigration law on behalf of the federal government, a decision which he said might only be reversed by a new administration.

He said he does not believe the program for checking businesses is either too harsh or too lenient.

Martin said the Supreme Court's ruling did not allow states to assess businesses financial penalties, finding that was the province of federal authorities. So he said lawmakers removed fines from the law.

According to LLR, last year the state assessed almost $1 million in fines on businesses violating the previous immigration law. But all but about $8,000 of that was waived because they were first-time offenders.

The current law is just as lenient for those running afoul of the immigration statutes for the first time. Those caught a second or subsequent time not submitting new employees through the federal database can have their right to conduct business in the state suspended for 10-30 days. The auditing program costs about $250,000 a year, Knight said, which is paid for using licensing fees and revenue collected by LLR.

From Jan. 1 through Aug. 31, Knight said, state auditors checked or attempted to check on 3,124 employers. Of that number, 1,092 did not hire anyone during that time period, 1,799 verified hires using E-Verify and 233 hired workers without using the federal database, Knight said. Most of those, however, occurred in the first six months and were not penalized.

Knight said the figures amount to a 92 percent compliance rate. He said many of the 62 employers not using E-Verify caught after July 1 hired their employees before July, meaning they were ineligible for penalties.

"We're finding that when we cited an employer for a violation, they are immediately enrolling in E-Verify," he said.

Martin said the idea of checking businesses is not to catch violators but to encourage all employers to use the federal database.

"They're in the business of encouraging compliance," he said. "And particularly in dealing with employers, many of whom are small employers, that for whatever reason don't know they are supposed to be E-Verifying their employees."

Martin said even during periods of last year when the old law no longer was being enforced and the new law had not yet started, he believes most businesses were using the federal database. He said he believes most of the businesses not following the law are small businesses that may not know about it.

Several small business owners or managers who asked not to be identified out of a fear of retaliation, said they did not know about the E-verify requirement in the law. Almost all of the businesses first cited by the state appear to be small businesses, including a pizza place, the homeowners association, a heating and air repair company and an electric business.

Martin said he does not believe the penalties handed first-time offenders are painful for businesses.

"I don't think that's unfair punishment," he said. "If they went out and took no action, they very well might ignore it. I have had it suggested to me that we eviscerated the law last year when we made those changes. We did what we had to do to comply with the Supreme Court changes. There is teeth in this law. There is substantial teeth in this law. We're just not able to raise the money in fines we did in 2008 because the Supreme Court says you can't."

Knight said the other point the audits make is that South Carolina's businesses are still not hiring.

"That's what we're finding a lot in the first months of the law," he said. "Particularly for small employers, they don't hire often anyway and in this economy they've not been doing very much hiring."

Martin said he believes both the new law and the economy have reduced the problem of illegal immigration.

"I think there were some illegal immigrants who left who went from community to community trying to find work and then moved on," he said. "I think they said South Carolina is pretty serious about enforcing the law. I think there is a little bit of that and a little bit of the poor economy that came to play. I don't hear it quite the way I did hear it three or four years ago, particularly before the Great Recession began. But I still hear it somewhat."

http://www.greenvilleonline.com/article/20121025/NEWS/310190100/

Previous blogs on this issue:
Small business deceived on E-Verify mandate
ACTION ALERT!! Say NO to mandatory E-Verify
E-Verify losing conservative support nationally
Top 8 reasons for House to oppose E-Verify mandate
Party loyalty & political fear wins, small business loses…again
Don’t Make Small Business do the State’s Work
Senate throws small businesses under the bus….again

All Memberships Now Include Accidental Death Insurance Policies

A membership in the South Carolina Small Business Chamber just got more rewarding thanks to a partnership with Liberty National Life.

All memberships—even the basic membership which is free—now include $3000 accidental death insurance policies for the small-business owner, employees and spouses.  Plus, every child of the owner and employee is covered with a $1000 accidental death insurance policy. 

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If you are currently a member of the Small Business Chamber and would like more information on the no-premium accidental death policy, click here.

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Romney's business used tax deduction he claimed he didn't know existed

The Presidential debates are over but that doesn’t mean what was said is now old news.  In fact, something Mitt Romney said in the first debate on October 3^rd is back in the news.  In my blog after that debate I said this Romney statement that should be getting more attention:

ROMNEY: “The second topic, which is you said you get a deduction for taking a plant overseas. Look, I've been in business for 25 years. I have no idea what you're talking about. I maybe need to get a new accountant.”

I said that Romney’s statement didn’t pass the laugh test.  Surely Romney understands our nation’s tax policy and what business expenses are.  After all, that is what Bain Capital was largely about, understanding the intricacies of our tax code in order to offer its clients and own executives ways to avoid paying taxes.

Today’s story in the Huffington Post exposes Romney’s flippant debate response regarding having “no idea” about a business deduction for moving jobs out of the country.  He simply wasn’t telling the truth.

        Bain Capital appears to have benefited from a provision in the U.S. tax code that
        grants companies tax breaks for costs associated with offshoring American jobs.
        Bain profited from the closure of a Denver factory in early 2001, when SEC filings
        list Romney as the sole shareholder and CEO of multiple Bain enterprises.

Stopping businesses from getting tax deductions for moving jobs out of this country is cited by small-business owners as the number one thing government can do to create more jobs at home.  So it is important that we have a President who is on our side on this issue and not pretending the problem doesn’t exist. 

Energy deregulation hype busted

In the next several weeks you will be reading and hearing more about the South Carolina Electric & Gas (SCE&G) proposed overall electric rate hike of 6.61%.  Many of you will complain that if we just deregulated the energy market and stop forcing residential and commercial customers to get their energy from SCE&G, Duke, Progress or a co-op, competition would bring down rates.

That’s what they did in New York in the late 1990s.  So it is instructive that the N.Y. Public Service Commission (PSC) recently undertook a review of exactly how their state’s deregulation of the energy market affected what customers paid.

You can read the whole Associated Press story on this review here.  But if you want a quick synopsis of the report, here it is.

An initial review by the PSC found some New Yorkers, including many in low-income neighborhoods, paid much more than if they had stayed with the big utility companies. They were sold on promises of lower utility rates, the report found.

The Chairman of the N.Y. PSC is quoted as saying about deregulation, “it's working very well for large industrial customers and sophisticated shoppers. The concern is residential and small commercial customers who don't have the insight or information they need."

We regulate utilities in South Carolina.  Yes, that means that power companies have monopolies but it also means that consumers get to influence how our PSC rules on proposed rate increase requests. 

I’ve already started writing about the current SCE&G rate hike proposal and soon I might have some negative things to say about it.  But this won’t mean that the grass is greener on the other side of the regulatory fence. 

If you don’t like what SCE&G is trying to sell to the PSC, speak up and let the PSC know how you feel about the proposed SCE&G rate hike by November 27^th.  There are three public hearings. All public hearings will start at 6 pm.

--Wednesday, October 24th, at the Aiken Technical College, Amphitheater (Room 701), 226 Jefferson David Highway, Graniteville, SC.

--Monday, November 5th, International Longshoremen’s Association Local 1422, 1142 Morrison Drive, Charleston, SC.

--Tuesday, November 27th, Public Service Commission of South Carolina, 101 Executive Center Drive, Columbia, SC.

You can check out the SCE&G filing (NO. 2012-218-E) at the PSC website, www.psc.sc.gov. If you would like to comment by mail, send it to SC Office of Regulatory Staff, 1401 Main Street, Suite 900, Columbia, SC 29201.

Debate fact-checking long overdue - Hooray for Candy!

The Hill's Congressional Blog
October 17, 2012

By Frank Knapp, Jr., president and CEO, South Carolina Small Business Chamber of Commerce

One of the highlights of last night’s presidential debate was moderator Candy Crowley’s real-time fact-checking about when President Barrack Obama first used the word “terror” in reference to the murders in Benghazi. We needed such quick corrections in the first debates on another important issue.

In those debates inaccurate statements were made about how allowing the Bush-era tax cuts for the richest 2 percent of Americans to expire on schedule at year-end would affect small-business owners.

 

While there appears to be no disagreement among the candidates that less than 3 percent of small business owners with pass-though business income would be impacted if these tax cuts ended, Governor Mitt Romney and Congressman Paul Ryan said in the first two debates that these 3% of small-business owners employ most of the workers in small businesses and account for most of the pass-through small business income in this country.

 

Read more

SCE&G wants more of your money

For those of you in the South Carolina Electric & Gas (SCE&G) territory, get ready to mark your calendars.  The power company is asking for an overall rate increase of 6.6% on electricity for its 660,000 customers.  For small businesses the rate hike would be 4.19% and residential customers would pay a whopping 7.35% more for electricity.  The total new money being sought from customers by SCE&G with this filing is $151.5 million.

This rate hike has nothing to do with the SCE&G construction of the two nuclear reactors under cosntruction that they are also requesting another $238 million from their customers.  And this has nothing to do with regular fuel adjustments.  This is all about regular operational costs for SCE&G.

Is the increase justified?  We’re going to find out because the S.C. Public Service Commission (PSC) will hold its hearing on the matter right after Thanksgiving.  I have formerly intervened in the process which gives me the right to cross examine all witnesses.  I have done this numerous times in the past and at the end of the day SCE&G proposed rate increases have been knocked down by up to 50%.

So what’s the prognosis this time?  Here are some facts.

--SCE&G already has the highest rates of the commercial power companies in South Carolina.  The average monthly residential bill for a 1000 kWh customer is $130.64 for SCE&G, $106.77 for Duke and $101.58 for Progress.

--SCE&G is asking to increase its return of common equity (the rate offered to Wall Street financiers to entice them to by SCE&G paper) from 10.7% to 10.95%.  This would be 0.45% higher than what Duke has been given by the PSC. 

--The parent company of SCE&G, SCANA, had a 29% increase in earnings in the second quarter of this year compared to the same period the year before.  That means that SCANA took in $72 million in profit in May, June, and July this year. 

If you want to let the PSC know how you feel about the proposed SCE&G rate hike, there are three public hearings.  All public hearings will start at 6 pm.

--Wednesday, October 24^th, at the Aiken Technical College, Amphitheater (Room 701), 226 Jefferson David Highway, Graniteville, SC.

--Monday, November 5^th, International Longshoremen’s Association Local 1422, 1142 Morrison Drive, Charleston, SC.

--Tuesday, November 27^th, Public Service Commission of South Carolina, 101 Executive Center Drive, Columbia, SC.

You can check out the SCE&G filing (NO. 2012-218-E) at the PSC website, www.psc.sc.gov.  If you would like to comment by mail, send it to SC Office of Regulatory Staff, 1401 Main Street, Suite 900, Columbia, SC  29201.

One candidate doesn't fit all businesses

Greenville OnLine.com
Oct 12, 2012

Written by Rhonda Abrams-- Gannett

During election season, everyone loves small business.

 

President Barack Obama loves small business. GOP presidential nominee Mitt Romney loves small business.

During the first debate, they mentioned the words “small business” 25 times. But where do the candidates stand on small-business issues?

Of course, small businesses care about a range of concerns. If you think the deficit is the most important issue, you’ll probably lean toward Republicans. If, on the other hand, you believe that supporting the middle class is vital, you’ll probably support Democrats.

If you’re not sure who to vote for Nov. 6, I’ve devised a fact sheet to help:

1. Your company’s legal structure is a “C’’ corporation.

2. You are in a health-related industry.

3. You make more than $1 million in taxable income, i.e. income after expenses and deductions, and are a sole proprietor, “S’’ corporation, LLC, or partnership.

4. You have more than 50 full-time employees and do not provide health insurance.

5. You want to start a business, are older than 40 years or have a medical condition.

6. You are in the coal, gas, or oil industries.

7. You’re in an environment-related industry.

8. You are in residential real estate, construction , home remodeling, or design.

9. Your business is incorporated and pays part or all of your health insurance, or you are an employee of a business that pays at least part of your health insurance.

10. You expect to inherit more than $5 million or leave more than $5 million to your heirs.

Who’s your small-business presidential pick?

1. Romney. Romney’s tax plan includes reducing the corporate federal tax rate to a maximum of 25 percent, instead of the current top rate of 35 percent, and eliminating the corporate Alternative Minimum Tax. Obama proposed lowering the top corporate rate to 28 percent with a maximum of 25 percent on manufacturers.

2. Obama. Under the Affordable Care Act, what detractors call Obamacare, an estimated 14 million more Americans will have health insurance by 2014; 29 million more by 2019. That means a huge number of new patients and opportunities for health-related small businesses and providers.

3. Romney. Both Obama and Romney propose continuing Bush-era tax cuts for most Americans. However, Obama would let the tax rates for the wealthiest return to Clinton-era levels to help reduce the deficit. Romney would keep those cuts, and someone with $1 million in taxable income would save more than $390,000.

4. Romney. Romney is committed to repealing the Affordable Care Act, which requires businesses with more than 50 full- time employees to provide a minimum level of health coverage or pay a fine.

5. Obama. Many would-be entrepreneurs can’t start a business because they can’t afford — or get — health insurance, especially those older than 40 or with health problems. The Affordable Care Act requires insurance companies to cover people with pre-existing conditions, creates competitive health care exchanges, and provides tax credits on health insurance premiums for those with incomes up to 400 percent of the poverty level. In 2010, that’s $88,000 for a family of four.

6. Romney. Romney’s plan calls for reduced regulation of energy production, which should help those in extraction industries such as coal, gas, natural gas, and hydraulic fracturing, also called fracking.

7. Obama. Because his energy policies contrast with Romney’s plan, above.

8. Obama. Romney says he will offset his tax breaks by eliminating other deductions. A likely target:home mortgage interest. In early October, the Republican nominee suggested that deduction might instead be part of a “bucket” of all deductions with a combined maximum total of $17,000. Many small businesses are in home-related industries, and it’s likely those businesses would suffer with the elimination of tax incentives for home ownership.

9. Obama. Another likely deduction to be eliminated to offset Romney’s tax breaks would be the exemption of taxes on employer-provided health insurance. If your employer pays all or part of your health insurance, that could easily become taxable income under Romney — even if your own small business is your employer.

10. Romney. Romney proposes eliminating the estate tax. Currently, estates worth $5 million or less are exempted from taxes, and estates worth $5 million or more are taxed at a maximum of 35 percent.

http://www.greenvilleonline.com/article/20121015/BUSINESS/310150001/One-candidate-doesn-t-fit-all-businesses

 

Business Leaders Say Stop Using Bogus Definition of Small Business to Mislead Voters and Policy Makers

Washington, DC, October 10, 2012 ­­-- The American Sustainable Business Council (ASBC), which represents small- and medium-sized companies, calls on candidates for office to stop misleading voters with bogus data based on inaccurate definitions of small business. Specifically, a report commissioned by the National Federation of Independent Business (NFIB) and the U.S. Chamber of Commerce, implied a complete falsehood: that the top 3% of small businesses are responsible for more the 50% of jobs in the United States.

“I’m incensed that a candidate for office would use small businesses to mislead voters,” said Frank Knapp, Vice Chair of ASBC and CEO of the South Carolina Small Business Chamber of Commerce. “Small businesses are the engine of our economy, not a way to score points in a debate.”

In the first Presidential debate last week, much discussion focused on the potential impact of tax policy on small businesses. But there was a dispute over the definition of small business, stemming from the NFIB/U.S. Chamber report.

ASBC contends that careful reading of the report shows that attribution of jobs to small businesses was made not to the top 3 %, but to all businesses that the report the report defined as small. Therefore, the statement that the top 3% of small businesses employ 50% of US workers is false.

Further, the report’s definition of small business was itself erroneous:

·         The report defines a small business by its corporate tax structure (S-Corp, LLC, Sole

        Proprietorship) instead of the most common definition of fewer than 100 employees. 

·         The report incorrectly equates individuals with any amount of taxable business pass-through income from an S-Corp or LLC with small business owner/operators who make hiring decisions.

“Under this wrong definition of small business, all of the big accounting firms, with tens of thousands of employees each, and some massive global companies like Cargill, would be considered ‘small,’” said Scott Klinger, Tax Policy Director for ASBC. “It would be misleading to say you are proposing tax policy to help small business if you are using this definition.”

“NFIB claims to represent me, but I’ve never heard from them and they’ve never asked my opinion,” said Josh Knauer, President and CEO of Rhiza Labs. “My company was recently named one of Pittsburgh's 10 fastest-growing tech companies. We have directly benefited from the tax dollars that went into the research that created Internet technologies long ago. This country needs to invest more in basic research to plant the seeds for the next inventions that will change our lives in ways we can't presently imagine. I never hear the NFIB talk about that.”

Dean Cycon, CEO of Dean's Beans Organic Coffee, in Orange, Massachusetts, does know NFIB.  "They tried to get me to sign up with them,” he said, “but it was clear that they represented a political agenda, not a small business agenda. I told them to take a hike. So it was shocking to hear them quoted so much in the recent debate, as if they were some sort of neutral, authoritative body. They are neither."

The American Sustainable Business Council and its member organizations represent more than 150,000 businesses nationwide, and more than 300,000 entrepreneurs, executives, managers, and investors. The non-partisan council includes chambers of commerce, trade associations, and groups representing small business, investors, microenterprise, social enterprise, green and sustainable business, local living economy, and women and minority business leaders. ASBC informs and engages policy makers and the public about the need and opportunities for building a vibrant and sustainable economy.  www.asbcouncil.org

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Editor’s notes:

The NFIB-commissioned report (July 2012) implies that job figures apply to business owners paying taxes in the top-two tax brackets (the top 3%). It cites an April 2011 E&Y report, which instead clearly says that all "flow-through businesses" employ 54% of the private sector workforce.

Since the issue is tax policy impact on small business:

·         The nonpartisan Joint Committee on Taxation estimated that only 3 percent of small business owners who pay pass-through taxes do so in the two highest income brackets. The Center on Budget and Policy and the Tax Policy Center have each reported that the percentage of business owners likely affected by the tax hike would be even smaller (CBPP), as low as 1.5 percent (TPC).

·         From the National Economic Council (White House report):

The 3 percent of “small business owners” who would see tax increases include many individuals who play no role whatsoever in running a business or who receive business income from “businesses” that have no employees.

The 3 percent includes:

•        Individuals who are only passive investors. A Treasury analysis found that on average “small business” filers with total incomes over $200,000 get less than a sixth of their total income from a business.

•        Individuals who obtain income from businesses that are not small or are only investment vehicles and have no employees. Contrary to claims that the tax increase under the President’s proposal would fall mostly on job creators, the same Treasury study found that only a minority of the filers with business income who would see a tax increase obtain any of that income from a small business with employees.

•        Law firm partners, hedge fund managers, and other highly compensated professionals who typically organize their businesses as partnerships. Over half of the 400 highest-income taxpayers in the country have some business income and therefore are counted in the 3 percent.12

•        Wealthy individuals whose “small business” is renting out their vacation home or other property.

 Contact: Bob Keener, 617-610-6766, bkeener@asbcouncil.org