Ending the Utility Monopoly: Lessons from H.5440 and S.878 (R.I.P.) 

South Carolina’s electricity market remains a regulated monopoly. Utilities operate within fixed territories, leaving customers with no choice of provider, while the state government sets the rates. Palmetto Promise Institute has long advocated for Limited Retail Choice (LRC). This proven reform allows customers to purchase electricity from alternative suppliers rather than being locked into service from the single utility in whose territory they reside.  

Only recently has South Carolina seen any real movement toward this change. Four bills were introduced in the 2026 legislative session; none made it out of committee. Of the four, H.5440 and S.878, which use a large-customer model, align most closely with Palmetto Promise’s efforts for Limited Retail Choice. 

H.5440 and S.878– Limited Retail Choice for large customers

H.5440, introduced by Rep. Gary Brewer (R-Dorchester), allowed non-residential customers using more than 100 kW to purchase electricity from a third-party supplier. This gives businesses—commercial and industrial customers—the ability to shop for competitive electricity rates rather than accepting whatever price their incumbent utility sets. Under this model, the utility still owns and maintains the poles, wires, and delivery system—the transmission and distribution infrastructure—while the third-party supplier provides the electricity itself, or generation. This is essentially like Amazon selling a product while UPS delivers it. Participating customers are responsible for any costs related to switching suppliers, which helps ensure those costs are not passed on to residential customers. 

1. 878, introduced by Sen. Michael Johnson (R-York), is very similar to H. 5440, but there is one main difference. S. 878 has a broader definition of who qualifies for retail choice. For example, a company with multiple locations could qualify if its combined electricity usage meets the 100-kW threshold. In contrast, H. 5440 applies the 100-kW requirement to a single delivery point.

The Benefit

The approaches in these bills would benefit the state by making it more attractive to large electricity users, such as data centers and factories, at a moment when demand is surging and putting pressure on utilities to raise rates. By letting these customers negotiate directly with competitive suppliers—and with the local monopoly utility for “wheeling” the power in—both bills would have increased competition, supported job creation, and lowered energy costs while narrowing the opportunity for incumbent utilities to shift the cost of serving large commercial and industrial loads onto residential ratepayers. 

How Virginia Compares

Virginia is a useful example that limited retail choice works with the traditional utility model. Since implementing LRC in 2007, large commercial and industrial customers in Virginia have purchased electricity from competitive service providers instead of their incumbent utility. Over 10,000 commercial and industrial customers in Virginia currently shop for power through competitive suppliers, saving an average of more than $10 million annually.  

Customers receive electricity through the same transmission lines owned and maintained by the local utility, while the competitive supplier provides the electricity. This has allowed Virginia to introduce competition without duplicating electric infrastructure or ending the local utility’s responsibility. Virginia has maintained a functioning limited retail choice market for nearly two decades. The now legislatively dead H.5440 and S.878 followed a similar framework, demonstrating that South Carolina would be building on a model that has already been implemented successfully in another state. 

The reform represented by H.5440 and S.878 offered a common-sense energy solution. This structure delivers the competitive advantages of wholesale markets and can help drive down prices for consumers. 

The Case for Competition

Restructuring has benefits at the wholesale level. Competitive generators operate more efficiently and make sounder investment decisions than monopoly utilities. States that have restructured see a real demand-side response. Large customers have immediate advantages. LRC reduces energy costs, allowing large commercial customers to negotiate directly with suppliers for rates that match their needs.  

One overlooked benefit of LRC is the contribution to grid reliability. Competitive pressure encourages more efficient operations across the system. Research from the R Street Institute found that generators operating in competitive electricity markets were associated with greater nuclear plant availability, lower costs at coal plants, and more efficient natural gas generation. In other words, competition creates incentives for utilities to reduce costs and operate power plants more efficiently.  

In retail choice areas, emissions have fallen. Competition has promoted emissions reductions as consumers exercise their choice for cleaner energy. From 2005 to 2019, carbon emissions declined 35% in retail choice regions and 27% in non-retail choice regions, highlighting an environmental advantage to a hybrid system. 

Monopoly utilities depend on government rules, and lawmakers tend to protect these businesses. In competitive markets, decisions are made more by competition and less by regulation. Monopoly systems create opportunities for political favoritism and corruption, as demonstrated by Santee Cooper’s failed V.C. Summer nuclear project. Competitive markets encourage better government oversight. Limiting customer choice to large businesses, as H.5440 and S.878 would have done, avoids many problems seen in full retail choice markets while providing the main benefit of competition.  

The Opportunity is Now 

South Carolina is at a tipping point. Demand from data centers and industrial users is surging. Electricity prices are rising, and the existing monopoly structure leaves large customers with no negotiating power. H.5440 and S.878 would have offered a path forward, one that other states have successfully implemented. By allowing large customers to shop for competitive electricity, South Carolina can attract new investment, lower energy costs for job creators, and begin introducing discipline to the market without destabilizing residential service. The evidence from Virginia and other states is clear: limited retail choice delivers real benefits. 

South Carolina could learn from these examples and take up a new bill modeled on H.5440 and S.878 in the 2027-28 legislative session.