Bring Georgia’s Best Electricity Market Innovation to South Carolina
Energy policy has long been a balancing act between market competition and regulatory oversight. Traditionally, South Carolina’s electricity market has been dominated by vertically integrated, monopoly utilities that control all three aspects of the power system—generation, transmission, and distribution. So, the Palmetto State has leaned toward regulation. But a relatively simple and proven reform is gaining traction—one that allows certain customers more freedom to choose their electricity provider while preserving key safeguards to ensure affordability and grid reliability.
This approach, known as Limited Retail Choice (LRC), is a market framework that allows select customers the ability to purchase electricity from alternative suppliers rather than being locked into service from the single utility in whose territory the customer resides. Unlike full deregulation, which allows all customers to choose their energy provider, LRC typically applies to large industrial or commercial consumers that meet specific criteria. LRC is unique in that it introduces some competitive pricing while avoiding the instability that can come with a fully deregulated retail market.
Key Definitions
Load – refers to the amount of electrical power consumed by devices or systems at any given moment. Represents the demand placed on an electrical system. GridX.
kW – A unit of power measuring the rate at which electricity is consumed or generated. One kilowatt equals 1,000 watts. For example, if a device has a power rating of 1 kW, it consumers 1,000 watts of power when operating. Diversegy.
kWh – A unit of energy representing the total amount of electricity used over time. Indicates how much energy is consumed when a 1kW devices operates for one hour. For instance, running a 1 kW appliance for one hour results in an energy consumption of 1 kWh. Diversegy.
LRC for SC
The push for LRC in South Carolina is here, with the Palmetto Industrial Energy Association (PIEA) leading the charge. PIEA, made up of eight major manufacturers and employers, is advocating for legislative reforms that would introduce LRC for businesses meeting a five-megawatt (MW) threshold. Their efforts, backed by Senator Wes Climer (R-York) and industry leaders, highlight the benefits of increased energy competition.
South Carolina has previously flirted with retail choice policies. The Territorial Assignment Act of 1969 allowed customers located within 300 feet of multiple electric suppliers to select their provider, but not surprisingly, this provision has not led to significant competition due to fixed utility territories. LRC presents a more structured approach – one that is both feasible and beneficial for the state’s economic future.
Examples of Electricity Demand (“Load”)
1kW – small appliance such as a space heater or microwave oven (ElectricityPlans).
.9 MW (900 kW) – Georgia’s Required Load for LRC
1 MW – Large commercial hotel (Pknergy).
5 MW – Medium-sized data center (California Utilities).
5 MW – Proposed South Carolina LRC Load Requirement
100 MW – Major industrial facility like a steel mill or large chemical processing plant (Stanford).
1000 MW (1 GW) – A city (population around 500,000 to 1 million people) OR, on the generation side, a large power plant, like nuclear or coal-fired station (Energy.gov)
Benefits
The opportunity for vast cost-savings makes implementing LRC in South Carolina incredibly compelling. A report from Daymark Energy Advisors, prepared for PIEA, shows that industrial customers in other states with LRC have seen savings of around $10 per megawatt-hour (MWh). For a business consuming five megawatts, that translates into approximately $350,000 in annual savings. Industrial plants requiring very large loads—100 megawatts (MW)—could see reductions as high as $7 million per year. The report finds that, “with this magnitude of savings to the industrial sector, South Carolina’s economy is likely to benefit in several ways including retaining or attracting new jobs, increased tax revenue and overall economic activity.” By promoting a market environment that meets large consumer’s needs, LRC has the potential to attract manufacturers to South Carolina, driving economic development, creating jobs, and increasing tax revenue.
Limited Retail Choice can also promote savings by reducing the need for costly new power plants, addressing South Carolina’s increasing demand. Under the current system, when additional generation capacity is needed to meet demand within their territory, utilities must purchase power on the open market and wheel it in. But long term, they must charge residential, commercial, and industrial customers for building and operating a new generation asset. With LRC, businesses can turn to alternative suppliers or invest in self-supply options like on-site generation, reducing strain on utilities while maintaining grid stability.
Reducing utility costs for large energy consumers has the potential to create a ripple effect throughout South Carolina. More competition in the energy sector means lower costs, not just for major businesses, but for the broader economy as well. When manufacturers save on energy, they have more capital to reinvest in expanding operations, creating jobs, and stabilizing costs for consumers. The resulting economic development, driven by LRC, that brings new businesses to South Carolina and increases tax revenues can positively impact SC’s public services like schools and roads. Simply put, a thriving industrial sector strengthens the state’s entire economy.
Some may raise concerns about grid reliability and infrastructure readiness. However, the Daymark report confirms that South Carolina has sufficient Available Transfer Capability (ATC) to support LRC without jeopardizing grid stability. Moreover, because utilities would retain control over transmission and distribution, they would continue to collect fees for those services, ensuring their financial viability even in a more competitive market.
Lessons from Georgia
South Carolina is not alone in considering LRC. Nineteen states, including neighboring Georgia and Virginia, have implemented some form of limited retail competition. Georgia, for instance, allows customers with a minimum peak load of 900 kilowatts (kW) to have a one-time choice over their supplier. After making their selection, businesses generally must remain with their chosen provider, helping to ensure stability while still allowing for cost reductions. Walter West, Chief Operating Officer at Electric Cities of Georgia has reported that this has made the state more attractive to investment, as the lower electricity rates make it easier for a new plant to become profitable.
However, it’s not just the big corporations in other states that have benefitted from LRC. The Daymark report writes that “independent studies of states that have allowed retail access in the recent past have shown that total cost of electric generation has declined, benefiting all customer classes, including residential and commercial as well as industrial customers.” By fostering competition among energy providers, retail access encourages efficiency and cost reductions, ultimately benefiting a broad range of consumers. By nature of the free-market aspect of LRC, South Carolina would be poised to obtain a similar competitive edge that would benefit all consumers.
The Road Ahead
Transitioning to an LRC model will require legislative action, regulatory adjustments, and careful planning. The South Carolina Public Service Commission (PSC) will need to develop new frameworks for overseeing market competition while maintaining grid reliability. Utilities, consumers, and policymakers must collaborate to ensure that the transition benefits all stakeholders.
South Carolina has not historically led on electricity market innovation. But with rising energy costs and increased demand from industrial consumers, the time to act is now. By adopting Limited Retail Choice, South Carolina has the opportunity to modernize its energy market, attract new businesses, and create a more competitive economic environment without disrupting grid stability.
The success of Limited Retail Choice in Georgia and other states offers a roadmap for South Carolina to follow. LRC represents a step towards more choice, lower costs, and a stronger economy, benefiting businesses and communities alike.
