Competition to Lower Costs for Consumers
These 6 recommendations are drawn from the Palmetto Promise Playbook report. You can view our 2021 policy agenda for other issues by clicking below.
FISCAL RESPONSIBILITY TO PROTECT RATEPAYERS
- Sell the State-Owned Utility by driving a harder bargain and investing the funds. Clearly the first item on the near-term agenda should be selling the South Carolina Public Service Authority (Santee Cooper) to a utility with a proven record of success. When the expansion of the nuclear station known as V.C. Summer failed in 2017, that left the two partners in the project with massive self-inflicted debt. Partner #1, the investor-owned utility SCE&G turned to its shareholders but was ultimately purchased by Dominion (Virginia). Partner #2, Santee Cooper, is a state agency that has no shareholders to turn to, only ratepayers. NextEra (Florida) has an offer to the State of South Carolina for the utility. As stated in H.5335 from the last legislative session, the state should continue to negotiate with NextEra and reach an acceptable deal with that entity or any other willing buyer. Dump the debt to save ratepayers and take the cash to invest in South Carolina’s future.
- Enact Energy Bill Transparency (“Let Me See the Fees”) so ratepayers can know what they are paying for. Utility accounting is unlike like that of any other business. Government agencies, not free markets, set rates customers must pay. A large portion of those rates are based on the “regulatory as- sets” held by the utility (costs for capital assets like power plants). Other charges that make their way to a home’s power bill are due to politics, where governments require utilities to charge fees or pay rates for political purposes. With energy bill transparency, utilities will be forced (or allowed) to tell us the basis of their charges, including if the charges are due to a political agenda.
- Keep Nuclear (where possible): Don’t abandon nuclear plants for political reasons. The fact is nuclear energy is cheaper than hydro, coal, natural gas, solar, and wind. But capital costs are nearly unbearable. Nuclear plants can be decommissioned but should not be taken offline for purely political reasons. With capital costs nearly fully written down, the electricity produced by a nuclear reactor is nearly free.
COMPETITION TO LOWER COSTS
- Liberate large load purchasers: Purchasers of large volumes of energy should have a choice of provider. Century Aluminum, known to many as Alcoa-Mt. Holly, is an aluminum smelter near Goose Creek. At its peak, Century’s process uses the same 50 MW of electricity as required by 20,000 homes. To make a profit, Century must find a power source with a competitive price. Century’s strategy for doing that going forward was to leave Santee Cooper and join a new municipal electric company being set up by the Town of Goose Creek, but a court said no. Century is an prime example of the need for a free market for large load purchasers. A power buyer should be allowed to contract with any entity willing to deliver the product to their door without interference from competitors or state regulators.
- Join a Regional Transmission Organization (RTO) to buy and sell electricity in real time. In much of the United States, independent energy companies band together to create separate non-profits called RTOs. These organizations manage the power grid by allowing high-voltage energy to be bought and sold among members in bulk, nearly in real time. The power providers in every region east of the Rockies are part of an RTO except for the Southeast. The nearest RTO to South Carolina is PJM, an RTO consisting of parts or all of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia. We should join PJM. A new legislative study committee recently empaneled could help make this happen if it has the courage to buck current providers.
- Open up full retail energy competition: Allow any willing seller to sell to any willing buyer. For energy prices to be truly competitive, more than one provider should be available to all ratepayers—residential, retail, and industrial. Northeastern and Midwestern states have competitive energy markets, as does Texas. In each case, retail sale of electricity is separated from the generation of electricity. That is an option for South Carolina, but here at Palmetto Promise, we have developed another option to add to the mix. With the PPI plan, a simple change to state law that would allow any willing buyer to purchase electricity from any willing seller. Sellers would include municipals (“munis”), electric co-ops, and IOUs (investor-owned utilities) who would compete for customers based on price and service.