There has been a great deal of talk in the news about setting of energy rates in South Carolina. The State House and Senate have recently approved a measure that would temporarily cut energy rates for SC&E&G customers by removing the nuclear-related increases since 2010. So I started to wonder how are energy rates set? In what ways are they the same or different for each energy provider?
Let’s take a look at the rate making process. South Carolina has several energy providers including Santee Cooper, SCE&G, Duke Energy, and over twenty cooperatives.
Santee Cooper is the state’s largest producer of electricity. It is public power, meaning it has no shareholders. Its customers are the only group bringing the company its revenue. It is state-owned. The board serves as the sole rate-making authority and is charged with setting rates. The 12 board members are appointed by the Governor, screened through the PURC (Public Utilities Review Committee, made up of select legislators) and then given final approval by the State Senate. Board members serve 7-year terms and cannot be removed at-will by the Governor.
Rates are presented to the board, there is a public review process where customers can comment, then it goes to the board for approval. This cycle is all done outside the legislative calendar, maybe to avoid politics? No other entity is involved in the rate approval process.
SCE&G is the largest subsidiary of investor-owned SCANA, a holding company based in Cayce, South Carolina. Dominion Energy, A Virginia based utility with a $45 billion market cap, has proposed to buy SCANA in December of this year for $7.9 billion. Their rate-making process also goes through the Public Service Commission (PSC), which has the final say in if they can increase rates and by how much.
SCE&G has been using the legislature-approved Base Load Review Act (BLRA) as the method to increase their rates annually to help pay for the additional units at the Summer Nuclear Plant. The Office of Regulatory Staff (ORS) serves as the voice for the customer throughout these processes.
Duke Energy is an investor-owned company and operates much like SCE&G when it comes to rates. Duke operates in many states including North and South Carolina, so it needs PSC approval for rate action in each state where it operates. ORS is also involved.
Finally, there are 20 electric cooperatives in South Carolina which are all pretty evenly spread throughout the state. Each one has its own board and that board sets those rates for that co-op. Santee Cooper makes the power, sells electricity it generates to Central Electric Power Cooperative, which provides wholesale electric service to South Carolina’s 20 electric cooperatives. So while Santee Cooper has only one contract (with Central Electric), Central Electric has 20 different contracts, one with each co-op. The co-ops have to set their rates to cover the costs from Santee Cooper and Central Electric.
How can consumers learn more about the process? How can we weigh in and comment during the process? How often are rates raised and how does it impact small businesses and residents? These are questions I want to explore, and plan to over the next weeks and months.
Each company website has TONS of information publicly available. Yet, it is complicated. Just clicking through on Duke Energy on one geographic area about rates, I found over 50 documents in the “Rate Schedule” section.
That said, I am learning that a little knowledge goes a long way. Also, my experience tells me that politicians and business leaders tend to make better decisions when they know people are watching and engaging. So, I intend to keep my eyes open.