Commentary: A commonsense energy solution for SC

This op-ed by Dr. Oran Smith and Michael Wright was published in the Post and Courier.

From families to industries, everyone wants a piece of what the Palmetto State has to offer. As South Carolina continues to grow, we must identify sustainable energy solutions to mitigate an increasingly strained electricity supply while keeping rates affordable, especially as tech companies seek to bring more data centers to the state. This is exactly what limited retail choice has to offer.

Without a system such as limited retail choice in place, South Carolina will struggle to meet its mounting energy needs, and continued progress will be hindered by a lack of adequate energy infrastructure.

Under South Carolina law, all energy users in the state are required to purchase electricity from their local utility. This means only a small handful of companies are responsible for 100 percent of the state’s power in their assigned regions, and they are able to monopolize energy pricing as a result. Modernization requires us to embrace America First free-market policies and support healthy competition, particularly as advanced manufacturing and technology companies eye S.C. locations. By implementing limited retail choice and embracing President Donald Trump’s deregulation agenda, South Carolina will leave the current monopoly system where it belongs: in the past.

So what is limited retail choice? It’s a system that enables the largest energy users, which cause the most energy strain under the current system, to choose alternative energy sources. This means industrial users would be able to purchase power from other states to make up for what South Carolina lacks in energy infrastructure, easing the burden for our power grid and our ratepayers.

This will raise South Carolina’s energy capacity instantly, without requiring costly construction projects on new power plants that take years to complete (if completed at all). For those who have concerns about this, limited retail choice does not signify complete deregulation of the state energy market. Rather, it strikes a balance between free-market competition and regulatory oversight. This will usher in competitive pricing while avoiding grid instability.

Limited retail choice is not a new concept. Nineteen states have already implemented limited retail choice, including Georgia, Texas and Virginia. A recent study conducted by Daymark Energy Advisors, which evaluated five states with such systems in place, estimated that this policy could save S.C. industrial energy users anywhere from $350,000 to $7 million annually depending on operational capacity.

It is also important to note that limited retail choice would not even be new to South Carolina. The natural gas market already operates under a limited retail choice system in which the state’s largest natural gas users are able to choose their supplier. Why shouldn’t South Carolina’s biggest energy users have a similar degree of autonomy with electricity?

Without limited retail choice, South Carolina ratepayers will be forced to pay the price for investment in our state through continued spikes in electricity prices to account for the significant energy capacity required by industrial users. Conversely, limited retail choice can empower South Carolinians through lower electricity rates and greater efficiency.

This will put more money in people’s pockets rather than generate higher energy costs for everyday ratepayers, allowing the benefits of economic growth to be felt statewide. By cultivating an energy market that is fair and free, South Carolina will open the door to energy diversification through policies such as “behind the meter,” which would permit industrial energy users to generate their own electricity through such innovative energy sources as nuclear and geothermal power.

As the upcoming legislative session approaches, now is the time for our policymakers to take action and prioritize commonsense energy policies that will promote responsible growth in our state.

Data centers will continue to be a hot-button issue this session, making commonsense conservative energy solutions such as limited retail choice even more crucial to consider.

While strides were made last year thanks to Senate Majority Leader Shane Massey and other members of the Senate Republican caucus who championed this policy, our lawmakers now have a pivotal decision to make: Will South Carolina adapt to the energy demands of the future by embracing free-market principles, or cling to a monopoly-style energy model that leaves the Palmetto State stuck in the past?

Oran P. Smith is co-founder and senior fellow of Palmetto Promise Institute. Michael Wright is executive director of the Palmetto Industrial Energy Association.