When the S.C. General Assembly returns to Columbia in January for a second swing at the $9 billion V.C. Summer nuclear debacle, GOP state Sen. Tom Davis wants lawmakers to dig deeper than selling the state-owned Santee Cooper utility.
That fix — along with lowering SCE&G’s power bills, which legislators voted to do in June — just addresses symptoms of a bigger problem: a monopoly system that inhibits innovation and produces the highest power bills in the country, Davis says.
The solution is competition, he adds.
The Beaufort Republican says he plans to file a proposal to repeal the state’s Territorial Assignment Act, which grants utilities monopolies over areas that they serve. Davis said his bill would let South Carolinians pick their utility — forcing power companies to compete by lowering rates.
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Davis’ proposal is an immensely complicated idea. It also likely will be opposed by the state’s investor-owned utilities, Duke Energy and SCE&G, which could be a Dominion Energy subsidiary by January.
But Davis and other conservatives say now is the perfect time to enact wholesale change, following the lead of more than a dozen other states — including Texas and Pennsylvania — that have moved away from monopoly systems.
“You only have rare opportunities to make dramatic changes or do something fundamentally different” while the public is engaged and watching, Davis said. “This is one of those moments when it comes to the energy sector.”
Davis’ proposal mirrors the findings of a 54-page report issued Wednesday by the Palmetto Promise Institute, a conservative think tank that also is pushing S.C. legislators to sell Santee Cooper — the state-owned utility that racked up $4 billion in debt on the failed V.C. Summer project.
Davis’ proposal stems from outrage over high power bills. South Carolinians paid the country’s highest electricity bills last year — about $400 more than the U.S. average, according to U.S. Energy Information Administration.
In part, that is because of the failed effort by SCE&G and Santee Cooper to build two nuclear reactors at the V.C. Summer Nuclear Station in Fairfield County.
Santee Cooper customers now are paying about $5 a month, or 4.5 percent of their power bills, for the project. That number will climb to $13 a month by 2023, the state agency has said.
Meanwhile, SCE&G customers saw their electric rates rise nine times — $27 a month for the average residential customer — to finance the project before S.C. lawmakers temporarily lowered those bills by about $20 a month this summer. The state Public Service Commission could make that rate cut — or a larger one — permanent next month.
Now, S.C. utility customers have no choice but to pay those higher bills or move, Davis said.
But his proposed solution is complicated.
Any proposal to demonopolize South Carolina’s power industry would have to include a slew of regulations to keep powerful investor-owned utilities from preying on smaller competitors, according to Scott Hempling, a Maryland attorney and Georgetown Law School adjunct professor who specializes in utility regulation.
State lawmakers or regulators also would have to ensure electric service is provided to customers in areas that no utility wants to serve or to customers whose power supplier leaves the state, Hempling said.
“The problem with many states is that they authorize competition, but they don’t take the steps to ensure it,” Hempling said.
States have had varied success in introducing utility competition, Hempling said. “Texas and Pennsylvania have done better than others, because they have had more close regulatory involvement, in making it successful.”
After the V.C. Summer debacle, there is some appetite for at least studying breaking up the state’s electric monopolies. The state Senate studied the idea of introducing retail electric competition about 20 years ago. But the idea went nowhere then, amid concerns about service reliability and volatile prices.
Senate Majority Leader Shane Massey, an outspoken critic of the utilities involved in the V.C. Summer debacle, said Davis’ idea warrants investigation again. But lawmakers will want to study it for years before they are comfortable making such drastic changes, said the Edgefield Republican.
“The situation we’re in now gives you the opportunity to look at other ways of doing it and see if it could benefit customers,” Massey said. “And if it would benefit customers, we ought to do it.”
Mike Couick, chief executive of the Electric Cooperatives of South Carolina, said the state’s co-ops are open to exploring utility reform, especially if they can save money — via economies of scale — with an alliance of regional utilities or the sale of Santee Cooper.
“The state needs to be open to a discussion to anything that brings value to the ultimate consumer while not robbing from Peter to pay Paul,” Couick said.
SCE&G and Santee Cooper declined to comment, saying they had not reviewed the Palmetto Promise Institute’s report.