The Palmetto Promise Institute and Sen. Tom Davis are to be commended for starting a public conversation on the need for greater competition in the South Carolina energy market.
In a recent column, Davis decried the monopoly that effectively exists in the state’s electricity market, calling for the state-owned Santee Cooper’s assets to be sold to a private investor-owned utility. The institute, meanwhile, issued a lengthy report that proposed the elimination of state-regulated geographic service territories, enabling consumers to receive electric service from any utility provider operating in the state.
While both proposals rightly recognize that greater competition will benefit consumers, they are not without challenges and drawbacks. Selling Santee Cooper to an IOU won’t address the underlying monopoly problem – nor will it free ratepayers from picking up the $12 billion tab for the failed V.C. Summer nuclear plant, as the new utility would still have to pass that debt onto its customers through higher rates.
Eliminating retail service territories, meanwhile, would also remove the so-called “obligation to serve” that requires utilities to serve all customers in their territory. That could leave some consumers – particularly those in remote rural areas – with no utility willing to take them on as a customer. What’s more, such a proposal would almost certainly face lengthy and expensive legal and legislative challenges. South Carolina deserves a faster response to the energy problem.
A more immediate solution would be to give South Carolina’s electric co-operatives and municipalities the ability to shop the existing wholesale power market to see what other electric supply options are available to them.
Currently, many of these co-ops and “munis” are locked into long-term contracts with Santee Cooper, some of which extend out as far as the year 2050. Many of these contracts were based on the premise that V.C. Summer would be in operation by now, providing the co-ops and munis with low-cost energy for years to come. Instead, they are now saddled with billions in debt for a project that will never come to fruition.
Allowing co-ops and munis to shop the wholesale market before their existing contracts expire would bring much-needed competition to South Carolina’s energy market. NTE Energy’s new, state-of-the-art natural gas-fired plants are already providing communities across the Carolinas with cleaner, more efficient – and more affordable – energy. With power generated by more efficient plants – and a rate structure unburdened by costs related to coal ash cleanup and failed nuclear projects – these communities are bucking the trend of rising power costs, and instead are seeing wholesale power savings of as much as 25 percent.
How were these communities able to take advantage of such savings? Simple. Their long-term contracts with their incumbent utility were up for renewal, giving them the ability to choose a power provider that best suited their unique needs – not the one-size-fits-all option typically provided by a large IOU. Giving other co-ops and munis the freedom to shop the market now would be a great first step toward increasing competition and reducing power costs for residents across South Carolina.