October 27, 2008
North Carolina Utilities Commission Approves Increase to PSNC Energy’s Base Rates, Reduction to Purchased Gas Portion of Rates
PSNC Energy, a subsidiary of SCANA Corporation (NYSE:SCG) that distributes natural gas in North Carolina, announced today that the North Carolina Utilities Commission has issued an order in the company's general rate case application authorizing PSNC Energy to increase its base rates. In a separate order today, the Commission approved PSNC Energy's request to decrease the cost-of-gas component of retail natural gas rates. The net impact of the two decisions will be a 6 percent reduction to the residential rate effective with November bills.
Base rate increase
The company's rate case order provides for an increase in PSNC Energy's annual natural gas margin revenues of approximately $9.1 million, or 1.32 percent, which is partially offset by a reduction of approximately $8.4 million in PSNC Energy's fixed gas costs. The result is a net increase to base rates of approximately $700,000 or 0.11 percent, effective in November.
The order also establishes an allowed return on common equity of 10.6 percent.
"Since 2006, we've spent more than $188 million to upgrade and extend our gas delivery system." said Rusty Harris, PSNC Energy's president and chief operating officer. "The Commission's order will allow us to recover costs associated with operating our system, so we can continue to meet the demands of our growing service territory while serving our customers safety and reliably."
The order also gives PSNC Energy approval to implement the customer usage tracker (CUT), a rate decoupling mechanism that breaks the link between revenues and the amount of natural gas sold. The CUT will apply to residential and commercial customers and will allow the company to periodically adjust its base rates based on customer consumption.
Finally, as part of the rate case order, PSNC Energy will be allowed to recover $750 thousand of conservation program expenditures incurred for its proposed conservation initiatives. The company's proposed initiatives include an in-home energy audit and weatherization program, a rebate program for customers who replace existing natural gas appliances with more efficient natural gas equipment, and discount rates for homes and businesses that meet certain energy efficient standards. PSNC Energy will make a filing with the Commission for approval of their conservation initiatives in late November.
Purchased gas component decrease
In a separate order today, the NCUC approved PSNC Energy's request to decrease the cost-of-gas component of the company's retail natural gas rates by seven percent, effective with November bills. The cost of gas purchased by PSNC Energy is passed directly on to customers without any markup in accordance with state regulations. PSNC Energy does not profit from this portion of its rates.
Net impact to residential customers
For PSNC Energy's residential customers, the net effect of the approved general rate increase and cost-of-gas decrease is a six percent reduction, which translates to a monthly savings of approximately $8.50 for the average residential customer this winter. The residential rate will go from $1.52 per therm to a $1.43 per therm effective Nov. 1.
PSNC Energy, headquartered in Gastonia, N.C., is franchised to serve a 28-county service area in North Carolina. The utility distributes natural gas to approximately 454,000 customers in 96 cities and communities, including the Raleigh, Durham, and Chapel Hill areas in the north central part of the state; the Concord, Statesville, Gastonia, and Forest City areas in the Piedmont; and the Asheville, Hendersonville, Brevard, and Sylva areas in the western part of the state. More information about PSNC Energy is available through the company's Web site at www.psncenergy.com.
SCANA Corporation, a Fortune 500 company headquartered in Columbia, South Carolina, is an energy-based holding company principally engaged, through subsidiaries, in electric and natural gas utility operations and other energy-related businesses. The company serves approximately 646,000 electric customers in South Carolina and more than 1.2 million natural gas customers in South Carolina, North Carolina and Georgia. Information about SCANA and its businesses is available on the company's Web site at www.scana.com.
SAFE HARBOR STATEMENT
Statements included in this press release which are not statements of historical fact are intended to be, and are hereby identified as, "forward-looking statements" for purposes of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, but are not limited to, statements concerning key earnings drivers, customer growth, environmental regulations and expenditures, leverage ratio, projections for pension fund contributions, financing activities, access to sources of capital, impacts of the adoption of new accounting rules, estimated construction and other expenditures and factors affecting the availability of synthetic fuel tax credits. In some cases, forward-looking statements can be identified by terminology such as "may,""will,""could,""should,""expects,""plans,""anticipates,""believes,""estimates,""projects,""predicts,""potential" or "continue" or the negative of these terms or other similar terminology. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties, and that actual results could differ materially from those indicated by such forward-looking statements. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include, but are not limited to, the following: (1) the information is of a preliminary nature and may be subject to further and/or continuing review and adjustment; (2) regulatory actions, particularly changes in rate regulation and environmental regulations; (3) current and future litigation; (4) changes in the economy, especially in areas served by subsidiaries of SCANA Corporation (SCANA); (5) the impact of competition from other energy suppliers, including competition from alternate fuels in industrial interruptible markets; (6) growth opportunities for SCANA's regulated and diversified subsidiaries; (7) the results of short - and long-term financing efforts; (8) changes in SCANA's or its subsidiaries' accounting rules and accounting policies; (9) the effects of weather, including drought, especially in areas where the Company's generation and transmission facilities are located and in areas served by SCANA's subsidiaries; (10) payment by counterparties as and when due; (11) the results of efforts to license, site and construct facilities for baseload electric generation; (12) the availability of fuels such as coal, natural gas and enriched uranium used to produce electricity; the availability of purchased power and natural gas for distribution; the level and volatility of future market prices for such fuels and purchased power; and the ability to recover the costs for such fuels and purchased power; (13) performance of SCANA's pension plan assets; (14) inflation; (15) compliance with regulations; and (16) the other risks and uncertainties described from time to time in the periodic reports filed by SCANA or South Carolina Electric & Gas Company (SCE&G) with the United States Securities and Exchange Commission (SEC). The Company disclaims any obligation to update any forward-looking statements.
Rate Case Fact Sheet ---------------------------------------------------------------------- Public Service Company of North Carolina, Inc. (d/b/a PSNC Energy) Retail Natural Gas Base Rate Increase Approved by North Carolina Utilities Commission Highlights ---------------------------------------------------------------------- Timeline: Letter of Intent Filed: February 27, 2008 Application Filed March 31, 2008 Docket Number G-5, Sub 495 Stipulation Filed August 13, 2008 Public Hearing Summer 2008 Requested Effective Date November 1, 2008 Test Period Data: Test Period 12 Months Ended Dec. 31, 2007, As Adjusted Retail Natural Gas Rate Base $710 Million Return on Rate Base 8.47% Approved in Final Order: Total Annual Revenue Increase $9.1 Million (1.32%) Reduction in Fixed Gas Cost (8.4) Net Annual Revenue Increase $0.7 Million (0.11%) Retail Natural Gas Rate Base $710 Million Return on Rate Base 8.54% Return on Common Equity 10.6% Customer Utilization tracker (Rate Decoupling Mechanism)