S.C. Senate Bill Would Make Utility Rate Hikes Easier

By: Jessica Holdman/S.C. Daily Gazette

COLUMBIA — The Senate passed a long-anticipated bill clearing the path for a new power plant in South  Carolina and fulfilling its pledge to address future energy needs in the  rapidly growing Palmetto State.

The legislation, approved 41-3, saw major changes to the sweeping energy bill halted last session over criticism that proponents had fast-tracked it through the General Assembly. Backers say it strikes a balance, empowering utilities charged with meeting the state’s energy needs but in a way that’s more palatable to consumer and environmental advocates.

The three Republicans voting “no” included Senate Majority Leader Shane Massey.

“We still have concerns but it’s nothing like what it would have been,” said Frank Knapp, president of the state’s Small Business Chamber of Commerce, who advocates on behalf of small business owners in the state.

The bill, sponsored by GOP House Speaker Murrell Smith of Sumter gives permission for Dominion Energy and state-owned utility company Santee Cooper to partner on a possible 2,000-megawatt natural gas plant on the site of a former coal-fired power plant along the Edisto River in Colleton County.

In its original form, the legislation saw significant pushback on its sweeping regulatory changes and rollback of consumer protections passed in the wake of South Carolina’s failed nuclear expansion.

A nuclear failure

Santee Cooper and Dominion’s predecessor, South Carolina Electric & Gas, abandoned an expansion of the V.C. Summer nuclear plant in Fairfield County in 2017, but not before they’d already jointly spent $9 billion. The debacle left power customers on the hook for much of that cost on a power plant that never produced a single kilowatt.

Angered by the failure, which was fraught with fraud and cost overruns, legislators cracked down. They fired and replaced the state’s utility regulators, loosened the leash on the state’s utility watchdog and put an extra set of eyes looking out for power customers in the state’s consumer protection agency.

As originally proposed, the House bill would have undone some of that work, consumer groups warned.

In response to those concerns, new committee-level leadership in the House made its own changes: keeping the consumer advocate in place and doing away with a proposal that would have reduced the size of the panel regulating power companies in the state.

The Senate, in a debate that stretched nearly until midnight Wednesday, tweaked the House legislation further after leadership cautioned against changes that could swing the law too far in power companies’ favor following the nuclear fiasco.

“Those who are Santee Cooper or Dominion customers, you are paying for V.C. Summer. You’re going to be paying for V.C. Summer for the next 14 years even though you’re not getting anything from it. And now the proposal is that we pay to build a new gas plant at Canadys,” said Massey, R-Edgefield. “That is my biggest heartburn on this.”

“They’re essentially going to be asking, if not forcing, customers to pay for two power plants when they only needed one,” he added.

The companies will still need the OK of state regulators to begin construction, as well as state and federal permits to connect to an interstate natural gas line needed to fuel the plant.

The other two Republicans voting “no” were Sens. Shane Martin of Spartanburg County and Tom Corbin of Greenville County. Massey, who co-led a Senate investigation into the V.C. Summer debacle, voted against it over his continued disgust over the nuclear fallout, but not before pushing for major changes.

Data center demand

Among those Senate changes are limitations on power-related incentives the state allows for data centers.

Massey said the amendment mirrors efforts by utility regulators in Georgia to say the cost of providing electricity to these centers, full of power-gobbling computer servers that run technologies ranging from artificial intelligence and 5G streaming of videos on mobile devices to high-speed financial trades, is borne by those companies.

Utility executives have testified that the largest of these centers can use upwards of 200 megawatts each and are a driving force, over and above residential and manufacturing growth, behind the state’s need for more power.

Sen. Chip Campsen, R-Isle of Palms, told the Senate that power usage by data centers in South Carolina is equivalent to 65% of demand from residential customers.

At the same time, Dominion brokered a discount electricity deal for a $510 million Google data center proposed near Summerville. The deal, approved by utility regulators last year, allowed the Virginia-headquartered utility to grant Google a special “economic development rider” rate — 6 cents for every kilowatt hour, compared to 14 cents that residential customers were paying at the time.

Utilities have said, even if data centers don’t come, South Carolina will need more power to meet federal regulations requiring them to eventually shut down coal-fired plants in favor of more carbon-friendly options.

But if more of these center for come to the state after May 30, 2025, Massey said he wants them to pay an equivalent share of the costs for power plants built to serve them.

Permitting power

Still, the bill contains some wins for utility companies, too.

It starts by setting time limits on the environmental permitting process, as well as lawsuits that power executives testified are often used to drag out the building of new power plants and natural gas pipelines for decades, to the point that the construction projects are no longer financially feasible.

The House took steps to limit the permitting timeline to six months.

To appease environmental concerns, the Senate passed an amendment to say the clock doesn’t start until regulators deem an environmental application is completely filled out. The change came after the Conservation Voters of South Carolina said it’s not uncommon for companies to submit these applications while they’re still missing all of the information needed to evaluate them.

The Senate also added a provision urging South Carolina’s court system to handle legal appeals of permitting decisions within a year’s time. And the bill pulls the state Appeals Court from the series of courts that hear these cases.

“I do think that the appellate process has been abused and and that’s why I think we ought to shorten that process,” Massey said.

Paying for power

Finally, the Senate added a section to the bill that would make it easier for utilities to raise power bills on an annual basis.

In their pitch, utility executives testified about comments from customers made during the company’s recent rate hike. Dominion’s South Carolina President Keller Kissam said customers asked why the utility didn’t raise rates on a smaller but more frequent basis, making it easier for those on a fixed income to adjust.

Kissam said the state uses a similar process for natural gas rates.

Utilities would go before regulators annually for up to five years to seek permission to raise prices. Rate payers can still protest and regulators still have the final say so over whether expenses meet the necessary requirements for an increase. But the process is less in depth because it doesn’t call into question a utility company’s allowed profit margin.

The process includes a cap. So, unlike the legislation that paved the way for the V.C. Summer debacle, it can’t be used to pay for a major project, such as the proposed Canadys gas plant, while it’s still under construction.

Consumer advocates, environmental groups and businesses organizations, large and small, opposed the measure.

They argued, while gradual annual increases might ease the burden for customers, power companies also would be less incentivized to hold down costs.

The state would review the process after five years to determine if its working the way utilities claim.

A 38-3 vote Thursday sent the roughly 70-page bill back to the House, which can choose to accept the Senate changes or vote to negotiate the matter further in conference committee.

The South Carolina Daily Gazette is a nonprofit news site providing nonpartisan reporting and thoughtful commentary. We strive to shine a light on state government and how political decisions affect people across the Palmetto State.