Santee Cooper has a rate freeze. Does it really?
A freeze for how long? Under what terms?
Santee Cooper’s June 22 board meeting shows cracks in the much-publicized rate freeze for customers. Will Santee Cooper’s financial health break under the weight of reality, or “reform”? Do loopholes in the freeze offer wiggle room into customer wallets?
Possible cracks in the freeze:
- Santee Cooper is looking for loans to add cash, or, liquidity
- Santee Cooper’s electric load is down. Less revenue is coming in
- What is frozen might have loopholes
The last point is interesting in two ways.
A rate freeze in name only?
Much was made some months ago of a rate freeze by Santee Cooper as part of a litigation settlement over the failed V C Summer nuclear project. Lots of headlines.
The freeze has exceptions that might allow for an early thaw. See the definition from the board meeting. Loopholes can be changes in the law, storms, cyber issues, or fuel costs.
Monthly adjustments can impact charges. “Adjustment values will be fixed, but methodology for applying them to customer rates will be consistent with current practice,” say board materials.
The value will stay the same, but the way the value is applied can change.
It is not final, though. In July a court will rule on the plan.
A looming exception is the amount of Central Electric’s actual load from Santee Cooper. That amount of power and sales can affect Santee Cooper. A board member asked if Central could impact Santee Cooper’s cash position. Response: “I think the short answer to that is that it could possibly happen. …Could that value be large, yes.”
So, there are exceptions. Board materials say, “It is likely that funds associated with exceptions will be assigned to a regulatory asset and recovered after the freeze period via rate adjustment.”
So, a change in charges? Check the board recording for yourself, especially after 29 minutes in. Is the explanation clear to you? Would this just defer a rate increase? You can view the Santee Cooper board meeting here.
Can the service fee change?
Does the rate freeze include the service fee, or, customer charge? That is the flat fee for service, not for actual power used. Even with the rate freeze – which applies to power – could Santee Cooper’s board still raise the service fee? That means customer costs would go up. Santee Cooper would be playing semantic games in saying electricity rates didn’t increase – but bills would still be higher. You can see how this works in this portion of the residential general service schedule that notes the $19.50 monthly service fee.
It is unfortunate and sad. Customers deserve better. Employees deserve better. The State of South Carolina should demand a better corporate culture.
Management’s time would be better spent building for the future, not covering for the past. Seems to require lots of time to look backward and mortgage the future.