Regulators Reject Utility's Attempt To Recover Legal Fees From Ratepayers

South Carolina utility regulators are preventing Carolina Water Service from raising its sewer rates to foot the bill for a pollution case.

“We agree with the S.C. Office of Regulatory Staff (ORS) that the company should not be allowed to recover its litigation expenses in this federal environmental action as the ratepayers derived no benefit from the expenditure,” the S.C. Public Service Commission wrote in its ruling, according to The State.

ORS is charged with representing the public interest of South Carolina in utility regulation for the major utility industries.

The saga has raised the question of who should bear the cost burden when a water utility is sued over pollution.

The PSC says, in this case, it should not be ratepayers.

“Commissioners denied $436,000 in expenses the utility sought to recover from ratepayers. That money would have gone to pay Carolina Water Service’s legal bill for unsuccessfully fighting a lawsuit filed by the Congaree Riverkeeper over the utility’s release of sewage into the lower Saluda River. The scenic waterway stretches between Lake Murray and downtown Columbia,” The State reported.

Carolina Water Service responded to the opinion.

“Carolina Water Service is reviewing the commission’s directives and will review the final order when it is issued by the commission,” the utility said in a statement. “Carolina Water Service ... is committed to promoting environmental stewardship in the state.”

Office of Regulatory Staff acting director Nanette Edwards previously said the PSC's previous decision in the utility’s favor gave “a green light to passing litigation costs to ratepayers where the utility failed to comply with the law, was sued and then lost the litigation.”

Researchers say water may become unaffordable for one-third of U.S. households in the next four years.