‘This wasn’t supposed to happen’: SC board protects utility monopolies, hurts ratepayers
On Nov. 15, the South Carolina Public Service Commission, the state agency charged with protecting ratepayers from abuse by the utilities that enjoy legislatively-granted territorial monopolies, ruled that two of those monopolies, Dominion Energy and Duke Energy, are only required to pay 2 cents and 3 cents per kilowatt-hour, respectively, for electricity produced by our state’s solar companies. These are the lowest prices in the country by nearly 50 percent.
The expert testimony at the PSC hearing in this regard was clear and unequivocal: no solar company is able to sell electricity to the utility monopolies for these low prices.
The PSC also ruled that the power purchase agreements offered by the utilities for solar power need only be for a term of 10 years, despite expert testimony that a contract of such a short duration would deny solar companies access to capital necessary to build their solar farms.
When the monopolies themselves build power plants, they are permitted by the PSC to lock customers into paying the costs for up to 20, 30 and 40 years at a time.
Offering to pay solar companies unreasonably low prices for their electricity and for contract terms insufficient for them to access capital means those companies will not enter into power purchase agreements and that they will not build solar farms — precisely the outcome the utility monopolies want.
This wasn’t supposed to happen. Earlier this year, the South Carolina Senate and House each unanimously passed and Gov. Henry McMaster signed into law the Energy Freedom Act (EFA). It was a step toward consumers paying rates based on what competition among providers dictated, rather than simply paying utility monopolies a guaranteed return on their invested capital.
The EFA process is straightforward: A solar company would make an offer to sell electricity for a specific price; if that price was less than what it would cost the utility to produce the same amount of electricity (its “avoided cost”), then the utility must purchase the cheaper power and ratepayers would end up with lower bills.
Since multiple studies show that unsubsidized renewable energy like solar is less expensive than what it costs Duke and Dominion to generate that same kilowatt-hour using fossil fuel, the clear expectation by legislators and the governor was that solar companies would gain a foothold in our energy-production markets.
Watching the PSC commissioners announce their decision, it is clear they understood this. As Commissioner Florence Belser said: “I think the legislature is telling us to provide as many avenues as possible for solar to be developed in South Carolina and given the opportunity to thrive in South Carolina.”
Instead, though, the PSC set an avoided cost and contract term that effectively guarantees no independent power company will build solar farms to compete with Dominion and Duke.
This is unacceptable; preventing a PSC outcome like this — where the agency does the bidding of the monopolies by shutting the door to competition — is the very reason the EFA was enacted. The PSC can and must reconsider its vote and right this wrong.
In any event, the PSC’s decision only further underscores the urgent need for the General Assembly to continue its push to end the utilities’ monopolies — to make energy producers compete and give consumers choices.
Elected officials of all political stripes despise (or at least ought to despise) cronyism, and South Carolina’s current electricity policy absolutely reeks of it.
Tom Davis, a state senator representing portions of Beaufort and Jasper counties, was the author and primary sponsor of the Energy Freedom Act in the South Carolina Senate.