Santee Cooper CEO Jimmy Stanton pictured at a legislative hearing in the state House office building. (Jessica Holdman/SC Daily Gazette)
COLUMBIA — Following rate hikes by Duke and Dominion, the state’s other major energy company could raise rates too, making 2024 a year when utility oversight boards approved increasing electricity costs statewide.
The governing board of state-owned utility Santee Cooper will vote in December on a proposed rate increase — the first in seven years — for the more than 200,000 customers it serves directly in Berkeley, Georgetown and Horry counties.
The average residential customer would pay nearly $11 more, or about $126 per month, in 2025. The increase would be effective April 1.
Executives of the Moncks Corner-based utility said it needs the increase to offset a projected $40 million revenue deficit next year and cover the costs of serving a growing customer base.
“Unfortunately, inflation has increased 25% since we last raised rates, and new power lines and transformers cost a lot more today,” CEO Jimmy Staton told the board in June, when the change was first presented.
A 2020 legal settlement in the wake of the failed expansion of the V.C. Summer nuclear plant barred Santee Cooper from raising its prices. That rate freeze expires at the end of this year.
South Carolina’s 19 electric cooperatives, serving roughly 1.8 million customers statewide, also will see their price rise with the end of the rate freeze. The amount that shows up on bills will vary from one cooperative to the next, said cooperatives spokesman Avery Wilks.
The cooperatives expect to pay 20% more next year, compared to this year, to get power from Santee Cooper, Wilks said. That’s due to a combination of Santee Cooper’s projected rising costs for fuel and services going forward and certain costs incurred during the rate freeze the utility can recoup from customers after the freeze is over.
Of that 20%, Santee Cooper spokeswoman Mollie Gore said about 5% is from service costs, similar to the cost categories for the residential customers directly served by Santee Cooper.
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Duke and Dominion
If approved, the increase would follow increases approved by utility regulators at the state Public Service Commission for Duke Energy and Dominion Energy earlier this year.
Dominion residential customers in South Carolina saw their electric bill go up more than $15 monthly, with the average residential customer paying $148 a month for power in September.
In August, the bill for Duke’s average residential customer in the Upstate went up roughly $12 a month, to about $154.
For Duke the changes mark the first increase to the base electric rates sought in more than five years. Dominion’s previous base rate jump came in September 2021.
A new kind of rate
At the same time, Santee Cooper is restructuring how it calculates its rates in an effort to encourage customers to spread out their power usage and reduce the amount of electricity the utility needs to have on hand when demand peaks.
These changes come as South Carolina wrestles with how to meet a growing demand for electricity as the state population balloons and new major manufacturers continue to move in.
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The utility is adding a surcharge for power used by customers during the busiest times of day — 3-6 p.m. from April to October and 6-9 a.m. from November to March — and discounting the energy used at other times.
Under the new system, customers will see three sets of expenses on their bills: A flat $20 service charge for all residential customers, a rate based on the total amount of power used during a month, and a third, so-called demand charge. That’s anticipated to make up roughly half of a customer’s total bill, based on the most amount of power used in an hour during times of high demand each month.
For example, if a residential customer uses 5 kilowatts of power at 4 p.m. one day in April, that customer will see a demand charge of $40 ($8 per kilowatt) on their bill that month in addition to their regular usage charges.
Santee Cooper spokeswoman Gore said residential customers currently average a monthly peak of about 5 kilowatts. That amount is likely to go up or down depending on the time of year.
While Santee Cooper is adding the extra charge, it is also reducing how much it bills customers for overall usage.
Customers will now pay just shy of 8 cents for every kilowatt hour consumed in a month, rather than the nearly 12 cents they currently pay during the warmer months and the 10 cents they pay from November to March when the air conditioner isn’t running as often.
Santee Cooper did make some adjustments after small business, consumer and environmental advocates, as well as government watchdogs, argued the surcharge structure was confusing and could blindside customers with big bills and won’t reduce overall energy use.
Still, not everyone thinks the new proposal is fair.
“Santee Cooper should not implement its plan to base a large portion of monthly bills for small business and residential customers on a single hour of usage,” said Eddy Moore, director of decarbonization at the Southern Alliance for Clean Energy.
“There are better ways to achieve the stated goal of reducing peak usage,” he continued. “We believe that all customers, including small business, residential, and solar customers, should be allowed a fair rate that rewards energy conservation.”
Frank Knapp, president of the South Carolina Small Business Chamber of Commerce said it’s often impossible for small business owners to adjust when they’re using electricity. Coffee shops and restaurants, for example, often have employees arriving early to prepare food and could be hit with large, peak-hour charges.
According to a chart provided by Santee Cooper, about 4,200 of its commercial customers in Berkeley, Georgetown and Horry counties are projected to see no change in their monthly bills.
The utility anticipates about 4,000 businesses will see savings and about 2,000 will see increases of about 5%. A larger portion, about 9,900 businesses, will see their bills go up 10% or more.
Santee Cooper did not provide a similar diagram for residential customers.
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Where it started
Mid-Carolina Electric Cooperative, based in Lexington County, pioneered this practice in South Carolina in 2016, Wilks told the SC Daily Gazette.
Several other cooperatives — including Santee and Horry electric cooperatives covering the Pee Dee and Grand Strand, as well as Blue Ridge and Broad River electric cooperatives in the Upstate — have since joined in.
Power companies have to produce enough electricity to meet all of their customers’ needs at the busiest times of day. That’s when residential customers are at home and using appliances, factories are running production lines, and businesses are opening their doors all at once.
But if certain groups of customers are willing to change when they use electricity, it can bring down the amount of electricity utilities have to make and transport through the power grid — in turn reducing the need for new power sources.
“The cheapest power plant is the one you don’t have to build,” Wilks said.
At Mid-Carolina, only about 10% of the customer base has changed how it behaves under the new rate calculations. But that small percentage has made a big difference for the power cooperative.
Despite growing from 50,000 customers eight years ago to 60,000 customers on its books today, Mid-Carolina has not had to buy extra electricity to meet demand, Wilks said.
And the changes allowed the cooperative to hold off six years before building a new $1.5 million substation.
There are also new technologies customers can install, such as a smart thermostat or water heater switch, to help them make power and money-saving adjustments.
Based on studies conducted by Mid-Carolina, a $60 water heater timer that pre-warms the tank outside of peak demand hours can save residential customers $17 a month on their power bill. A smart thermostat, which can cost anywhere between $50 and $200, saves about $19 a month.