Will Nuclear Costs Be a Family Budget Buster?

From Scott Carlberg

Paying for essential energy needs should not be a family’s budget buster. Lots of family needs compete for the same dollars – education, replacing a car, work clothes, groceries, trying to save for retirement.

Budgets are top of mind. The General Assembly of South Carolina makes decisions soon about the sale of Santee Cooper. That decision can impact electric costs, and how much has to feed the energy piggy bank. The wild card is debt from the terminated nuclear project and the ongoing operational debt, adding about a $1 million a day on the $9 billion tab. That is corporate debt that has to be repaid by Santee Cooper customers.

Families themselves are stretched on debt in the US. “Total household debt, driven by a $9.1 trillion in mortgages, is now $837 billion higher than its previous peak in 2008, just as the last recession took hold.” (Source) Debt can be sneaky, surprising. Controlling, too.

Family budgeting is no party anyhow – estimating needs for food, health, consumer debt (e.g., student loans, car payments), personal care and entertainment. Then there is a category that financial experts at Quicken call Utilities: “Having water, electricity, and heating and cooling is vital to any household — and it makes your life a lot easier and more pleasant — so paying these expenses is a top priority. Your household budget category for utilities should include gas, electricity, water and sewage, land line and cell phone payments, cable television and Internet access. Up to 10 percent of your income should be a sufficient total for these services.”

Up to 10 percent for energy and cable, phone, water. But some families have large energy bills that can eat up a huge cut of income. Those families can fall into energy poverty, which ECC wrote about several months ago:

In South Carolina, the Charleston Post and Courier summed up the energy poverty issue well last February. “Part of the cost is geography: In the South, a reported 64 percent of homes primarily heat their homes with electricity in the winter. That’s compared to 34 percent of homes in Western states, 22 percent in the Midwest and 16 percent in the Northeast.”  The South needs energy for heating and cooling for more time year-round compared to other areas.

Here’s some perspective. A WalletHub report on January 7 listed states by an “affordability rank” for families. It puts South Carolina at 43 (NC at 42, by the way). Number 1 is best, 50 not. Affordability is measured by financial inputs such as in these in the WalletHub story:

  • Housing Affordability
  • Median Mortgage Debt
  • Median Non-Mortgage Debt
  • Share of People Who Save Money for their Children’s College Education
  • Share of Children Aged 0 to 17 Years Whose Family Had Problems Paying for Their Children’s Medical or Health Care Bills During the Past 12 Months
  • Median Annual Family Income
  • Average Annual Family Health Insurance Premium

Families face a balancing act in budgeting, sometimes for electricity. Can the nuclear debt add more?

Other stories show that South Carolina families can be financially challenged. USA Today reported that Allendale County, SC (west of Charleston and north of Savannah) was listed as one of the 50 poorest counties in the nation, ranking at number 40.

It’s tough. “A decade after recession hit, SC incomes haven’t recovered,” said the Charleston Post and Courier last September.

All this is to say that when the piggy banks are lined up for their share of the household budget, some piggy banks may have to be fed more than others. Adding to energy costs is not easy for some families. Predictability in electric costs, and as much stability as possible is essential.

Policymakers will make the call on how to handle the nuclear debt, which could spike rates for Santee Cooper customers and other companies supplied by Santee Cooper. Decisions need to be made quickly and thoroughly  – to limit the million-a-day added costs – and in a way that helps customers. Make that, families.