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24839 - South Carolina Energy Users Community v. Public Service Commission and SCE&G

Davis Adv. Sh. No. 31
S.E. 2d

THE STATE OF SOUTH CAROLINA

In The Supreme Court





South Carolina Energy

Users Committee, Appellant,

v.

The Public Service

Commission of South

Carolina and SCE&G, Respondents.





Appeal From Richland County

Thomas J. Ervin, Judge





Opinion No. 24839

Heard April 7, 1998 - Filed September 14, 1998



AFFIRMED





Daniel B. Lott, Jr., of Sherrill & Roof, LLP, of

Columbia, for appellant.





Francis P. Mood, of Sinkler & Boyd, P.A.; James B.

Richardson, of Svalina, Richardson & Smith; and

Sarena D. Burch, of SCANA Corp., all of Columbia,

for respondent SCE&G; and F. David Butler, of

S.C. Public Service Commission, of Columbia, for

respondent SCPSC.





p.22


SC ENERGY USERS COMMITTEE v. PUBLIC SERVICE COMMISSION & SCE&G





Finney, C.J.: This is an appeal1 from a circuit court order

upholding an order of the Public Service Commission (PSC) which

approved a rate increase for respondent SCE&G. Appellant contends the

evidence does not support the rate of return on equity awarded in the

order, and that the PSC exceeded its authority in authorizing a Storm

Damage Reserve Fund. We affirm.





Appellant first contends that the PSC erred in allowing

SCE&G a 12% return on equity. It concedes that expert testimony in the

record supports this rate, but argues that the award itself is flawed

because it rests on a speculative basis. See South Carolina Cable

Television Ass'n v. Public Service Comm'n of South Carolina, 313 S.C. 48,

437 S.E.2d 38 (1993) (rate of return cannot be based on unknown expenses

and profits from future technological innovations). Here, the experts

testified that investors were concerned about the perceived threats to the

industry resulting from deregulation and increased competition, and opined

that this perception of risk should be a factor in determining the rate of

return. In an unartfully drawn order, the PSC first appears to say that

the rate increase is necessary because competition is inevitable and events

are unforeseeable, but then states that investor caution concerning

increasing competition is a factor in setting the rate of return.





We must affirm the decision of the PSC if it is supported by

substantial evidence in the record. Heater of Seabrook v. Public Serv.

Comm'n of South Carolina, 324 S.C. 56, 478 S.E.2d 826 (1996). In this

case, we are faced with an order which, if predicated on unforeseeable

future events, must be reversed as speculative. South Carolina Cable

Television Ass'n, supra. On the other hand, if this part of the order is

read as the respondents ask us to, as predicated on the perception of the

threat of increased competition, then the order does not rest on purely

speculative evidence, but rather on the testimony of the experts and

therefore should be upheld under the substantial evidence rule. Hamm v.

South Carolina Public Service Comm'n, 309 S.C. 282, 422 S.E.2d 110

(1992). Since the expert evidence before the PSC involved the perception

issue, we find in this instance that the order should be construed as

respondents urge. We caution the PSC, however, that it must write orders

which are clear on their face, and which do not burden the courts with

determining the Commission's meaning and intent. cf., Hamm v. American

Telephone & Telegraph Co., 302 S.C. 210, 394 S.E.2d 842 (1990) (court

suggests clearer format in future PSC orders); Heater of Seabrook v.




1We grant appellant's motion to add to the record.

p.23


SC ENERGY USERS COMMITTEE v. PUBLIC SERVICE COMMISSION & SCE&G





Public Service Comm'n, Op. No. 24821 (S.C. Sup. Ct. filed July 21, 1998).

We find substantial evidence in the record regarding the role played by

investor perception in this area, and therefore affirm this issue.





The second issue concerns the PSC's authority to permit

SCE&G to accumulate a Storm Damage Reserve Fund to offset expenses

in the event of catastrophic weather damage to its equipment. Appellant

contends that this portion of the order results in the PSC regulating

insurance, a power not given it by statute. We disagree with appellant's

fundamental contention, that the accumulation of this Fund converts

SCE&G into an insurer. Southern Home Ins. Co. v. Burdette's Leasing

Service, Inc., 268 S.C. 472, 234 S.E.2d 870 (1977) (creation of fund in lieu

of insurance does not make one an insurer). We find this issue to be

without merit.





For the reasons given above, this appeal is



AFFIRMED.

TOAL, WALLER, BURNETT, JJ., and Acting Associate Justice

Marc H. Westbrook, concur.





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