Yesterday: Big business wins two, small business picks up one

It was a busy day yesterday for the S.C. Small Business Chamber of Commerce.  Two Senate subcommittees and the House Ways and Means Committee held meetings on legislation we supported.  Unfortunately two of these bills did not get the favorable votes we wanted.

The morning started out with a Senate subcommittee on S.145, a bill that would outlaw most favored nation clauses in contracts between health insurance companies and healthcare providers.  These contracts are used to guarantee that one carrier always gets the best provider reimbursement rates forcing the provider often to charge other insurance companies more for the same services.  The result is that other insurance companies have a harder time competing with the company that has the most favored nation clauses in their contracts.  This leads to lack of competition in our health insurance market which drives up rates for everyone.

Only two people testified at the hearing—a representative of Blue Cross, Blue Shield and myself.  The BC-BS argument against the bill was that they are a major employer in the state, they are the only domestic health insurance company in the state and that the Legislature shouldn’t do anything that would hurt even if that means allowing them to maintain uncompetitive practices. 

One Senator totally bought into that BC-BS pitch and threw the free-market and reduced insurance rates for small businesses and individuals under the bus.  The other Senator didn’t think the state should make any changes in our insurance laws until the Affordable Care Act goes into effect.

So don’t look for this bill to see the light of day again until January, 2014, if then.  Congratulations to BC-BS for having their way once again with our Legislature.

Then a Senate subcommittee met to discuss S.536, a bill that would make it legal for third parties to finance and own solar panels installed on homes and commercial buildings and sell the electricity produced to the occupant.  This practice has worked well in other states and results in the financing company to make money and the building occupant to save money.   After lengthy testimony, including mine, on the merits of allowing the free market to reign, the subcommittee voted to hold another public hearing.  The reason—they wanted to hear from the energy companies (Duke, SCE&G and Progress Energy). 

The question is why would the Senators give these companies another chance to be heard?  The energy lobbyists were sitting in the room but simply chose not to testify in public.  The answer is pretty simple.  By having another meeting probably after the Senate deals with the budget, the deadline for moving any legislation from the Senate to the House this year is lost.  Congratulations to the big utility companies for winning once again over the consumers.

But there was a ray of sunshine yesterday.  The House Ways and Means Committee voted to send H.3125, the Microenterprise Development Act, to the full House.  This bill will empower our Department of Commerce to help our non-profit microloan organizations obtain more money to lend to very small businesses (4 or less employees).

A present for small businesses

If you’re small business pays South Carolina Electric and Gas (SCE&G) for electricity, your holiday gift arrived yesterday. 

Back in June SCE&G had filed for a 6.6% average general electricity rate increase.  As I have done numerous times I intervened as an individual in the process to argue against increasing rates. 

You might remember the controversy I caused in revealing that included in the justification of the rate hike request was the cost of Zumba classes for SCE&G employees and expensive alcohol and dinners for SCANA board members.  To read this information and an explanation of how the regulatory process works, click here.

Now for your gift.

Yesterday the SC Public Service Commission approved a Memorandum of Understanding between SCE&G and most of the intervenors in the company’s rate case.  The net impact to small businesses will be only a 0.08% increase in electric rates.  The agreement also provides for no other general SCE&G electric rate increase until January 1, 2015. 

SCE&G will have a net revenue increase of $32 million or 1.38%.  The significant decrease from the original proposal was due to several factors.  The agreement moved-up an anticipated decrease in fuel costs, the company’s rate of return on equity was reduced from the requested 10.95% to 10.25%, and the Office of Regulatory Staff struck out $1.4 million in unallowable company expenses.

Residential, medium size businesses and large businesses will also benefit from the settlement.  The net rate increases for residential customers will be 1.8%, 0.63% for medium size businesses and 1.67% for large businesses.

This is very good news and I am very appreciative of the dedicated efforts of the Office of Regulatory Staff (ORS), which is responsible for making sure consumers and power companies are both treated fairly in the regulatory process.  ORS worked with all the intervenors to craft this very favorable agreement for small businesses and the other groups. 

Happy Holidays!

Opposing workers’ comp and SCE&G rate hikes

The workers’ compensation insurance industry and SCE&G both have hearings in the coming months regarding their requests for more revenue.  The South Carolina Small Business Chamber of Commerce (SCSBCC) and its president and CEO, Frank Knapp Jr., will intervene to oppose both rate hikes.

The SCSBCC is joining the S.C. Consumer Advocate’s Office in pushing back on a 7.3% average increase filed by the National Council on Compensation Insurance.  The Administrative Law Court is scheduled to hear the case starting October 8, 2012.  Representing SCSBCC from the Injured Workers Advocates will be Bill Smith of Chappell, Smith & Arden and Kevin Holmes of the Steinberg Law Firm.

“Since 2005 Bill Smith and Kevin Holmes have formed an effective team with Elliott Elam, the state Consumer Advocate, to successfully fight against proposed increases in workers’ compensation insurance costs to businesses,” said Mr. Knapp.  “Because of our efforts, Administrative Law Judges have ordered up to 44% decreases from the insurance industry’s requests.”

On November 27 the S.C. Public Service Commission will begin hearing a 6.61% overall electricity rate hike being sought by SCE&G, which serves 668,000 residential and commercial customers in South Carolina.

Mr. Knapp will officially intervene in the hearing to oppose the hike as he has done effectively since 2004.  He has worked closely with the S.C. Office of Regulatory Staff in these rate cases resulting in proposed hikes being reduced by up to 50%.  Mr. Knapp does not need legal representation in these hearings because he is intervening personally as a residential and commercial customer of SCE&G. 

“SCE&G’s parent company, SCANA, saw its earnings increase by 29% in the second quarter of this year,” said Mr. Knapp.  “In addition the company is justifying its request by saying it needs a return on equity almost 0.5% higher than the current rate for Duke Energy.  Small businesses simply want to tell SCE&G “NO”.  Fortunately I will have that opportunity.”