Why is electricity so expensive in South Carolina?

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We pay more than any other state — but not all of us do

By ROBERT MEYEROWITZ

In a ranking of states by total energy costs, South Carolina is solidly in the middle, at 24th most expensive.

When the costs of electricity, natural gas, motor fuel, and home heating oil are averaged and combined, state residents spent $278 per month.

That’s much better than the most expensive state, Connecticut, at $380, and much worse than the least expensive, Washington, at $226. (The District of Columbia is even lower, at $219.)

More curious is the ranking of states just on monthly retail electricity costs.

To get that figure, the authors of a study released last week by the personal-finance firm WalletHub took data from the Census and from the U.S. Energy Information Administration. Then they multiplied the average monthly consumption of electricity per housing unit — in South Carolina, that’s 1,380 kilowatt hours — by the average retail price for electricity, which here is $0.1257 per kilowatt hour.

The result: South Carolina is the highest in the nation, at $173.47.

It’s followed by Alabama, at $168, Connecticut, at $166, and Florida, at $162. The lowest is New Mexico, at $90.

The numbers are significant, WalletHub notes, because in the U.S., “energy costs eat between 5 and 22 percent of families’ total after-tax income, with the poorest Americans, or 25 million households, paying the highest of that range.”

Why is electricity so expensive in South Carolina?

The answer to the price question really depends on how you get your power. In South Carolina, electricity is sold through 45 utilities, cooperatives, and municipally owned electric systems.

The South Carolina Public Service Commission (PSC) regulates, and must approve any rate increases for, Duke Energy, Lockhart Power, and South Carolina Electric & Gas (SCE&G), which are the state’s privately held utilities. The PSC doesn’t regulate Santee Cooper, which is a state-owned power producer, or municipal or co-op retail power providers, who are also Santee Cooper customers.

In 2008, Santee Cooper and SCE&G partnered to construct two nuclear reactors in Jenkinsville, 25 miles northwest of Columbia, whose future is now in doubt.

The PSC allowed SCE&G to raise its rates in order to help finance its 55-percent share of the $11 billion project. This was in line with the Base Load Review Act (BLRA), passed by the state legislature in 2007.

The BLRA essentially said that power companies in South Carolina could charge customers in advance for the construction of new plants, and that they would be guaranteed a profit.

In 2007, SCE&G, which today has 258,000 residential electricity customers, was charging about 10 cents per kilowatt hour. After eight rate increases under the BLRA, among other hikes, that rate is now at about 15 cents per kilowatt hour, an increase of 50 percent in 10 years.

The current SCE&G residential rate of $0.14753 per kilowatt hour is also much higher than the average rate for South Carolina, which helped propel the state into the most-expensive position.

By comparison, Duke Energy Carolinas, one of two Duke divisions in the state, that together serve 612,000 residential electricity customers, was charging those customers just under 8 cents per kilowatt hour in 2007. Today, that rate is about 11 cents an hour, an increase of about 37 percent. Its current rate is much lower than the state average.

Duke Energy Progress, the other Duke division, was charging its residential electricity customers 9.6 cents per kilowatt hour in 2007. Today, it’s charging about 11.3 cents per kilowatt hour, an increase of about 18 percent over 10 years. That current rate is also well below the state average.

Santee Cooper, which has about 177,000 retail power customers, currently charges its residential electricity users about 10.6 cents per kilowatt hour, which is even farther below the state average.

All of this at least suggests two points.

The pain associated with having the highest average monthly retail electricity costs is not felt evenly in South Carolina.

Take SCE&G’s rates out of the equation, average the rates from Duke and Santee Cooper, and South Carolina would rank somewhere between 8th or 9th most expensive, between Maryland and Georgia.

And if it were not for SCE&G’s rate hikes tied to the BLRA and the utility trying to build the two nuclear reactors — by one estimate, the construction costs now account for 18 percent of residential customers’ electricity bills — there would be a lot less to see here.

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  • Lyn Wilson

    If I was a utility, why would I care if my project was way over budget and way behind schedule? I am allowed to charge captive customers whatever is necessary to meet project costs, and I am guaranteed a profit on that revenue.

  • Joe Dugan

    For homes heated and cooled by electricity the cost increases for SC residents are surpassed only by healthcare (Obamacare).
    The tremendous drop in oil and natural gas prices is not reflected in home electricity costs. If this were a free market they would be but no, once again we have regulators setting artificial prices based on their secret formulas that are hidden from the taxpayers.
    For elderly people especially, who are on a fixed income that does not reflect the real increases in inflation, this is especially burdensome unless of course one qualifies for a subsidy.
    Subsidies themselves are inflationary for hard working taxpayers who are fed up with monopolies and redistribution of the wealth.
    Politicians beware, the patience of the voters is not endless!

  • Pops

    Absolutely correct. All of these utilities know they have us as slaves to their whims. When we have only one choice it’s called a monopoly which I thought was illegal. Where is the incentive to save money or keep costs low? I worked as a contractor to SCE&G and BEC. They are union with excellent pay and benefits including travel pay. We worked sub stations and did ten hours a day. If the sub station was 3 hours away we went and worked 4 hours so after setting up the tools which took half an hour we worked 3 hours because it took half an hour to put the tools back on the truck so we got paid for ten hours but actually worked and produced 3 hours a day. Every week we worked 12 hours and got paid for 40. I enjoyed the money but even at the time I realized out of the $600.00 a week I was paid $420.00 was for sitting in a truck reading a book.

    • LA

      I agree it is illegal to rippoff tax paying consumers. I feel like where is our freedom to live and this should be illegal. Looking at this article above I see they state Santee Cooper charges .10 per kilowatt well I’m struggling and by Bill states .12 per kilowatt. I always wondered ever since Santee Cooper got sued about 90 million for dumping coal ash into the Waccamaw River at the Grainger plant off 501 between Conway &myrtle beach, SC that we as customers would have pay for their wrong doings. I didn’t tell them to break the law and I shouldn’t be one paying for their mistakes. I’m old fashion and raised with good values. Believe in good customer service and fairness but very upset how getting ripped off and the unfairness. They living and doing beyond their means and everyone else’s expenses . We should be a community of saving not causing hardship. It’s not healthy to be imposed with this stress or burden of being overcharged.

  • Southernfriedyankee

    A couple of ways to beat this. One reason I went geo-thermal was to greatly reduce my wattage consumption. (I knew that in the long run, people will have the last say with companies when they talk to their legislators, if they don’t act like sheep) But seriously, grid tied , owned solar, at your house, is affordable. In round figures necessary equipment: i.e. parts: quality inverters and solar panels can be purchased for around $16,000 that is reliable and warrantied. Labor be another $16,000. For handy people and electrician types, installation expense could be dropped 80%. If people push their legislators, SCE&G and the others can be forced to give a better, fairer “pay back” but even without a fair payback, your power bill monthly (with power produced between 9:00 AM and 3:30 PM) can be reduced to $40.00 monthly and less.

    • Philip Branton

      Southern Fried,….also a change in the state building codes to mandate ICF block construction instead of wood construction would help citizens even more. Heck, low income section 8 isn’t even being built to the latest standards to benefit the low income rate payers.

      • AM

        I think we should be able to choose what electric company we like have or support. You get choose what cable company where is freedom of speech. We need fairness , we need not be ripped off. We need live in safe trustworthy healthy environment . We need cost effectiveness and what is reduce the use when you pay at Santee Cooper ever if power is off. If you average almost 2.00 a day times 30 days in month that’s 60 dollars with lights off no electric and what is the Misc. adjustment never understood that. We all need battery operated homes. If car battery can be good in car for 8-10 years looks like there would be battery for home.

    • rwwllms

      Reducing your power usage doesn’t always translate into lower power bills. SCE&G has the legal right to add a surcharge to your bill if you don’t meet a minimum fee.
      For example if SCE&G expects you to pay $175/month and your current bill is only $150 they can add a $50 surcharge. I am not making this up. They got the SC legislation to approve this.

    • Lyn Wilson

      I have to disagree with your statement “in the long run, people will have the last say with companies when they talk to their legislators”. As a legal “person”, corporations have far more power than human persons, and very limited liability. A corporation can contribute large sums directly to a political candidate’s ‘campaign’ without having to disclose anything; a corporation can also sue a person who presents opposing views as ‘limiting it’s right to free speech’…even tho the suits may be frivolous, the corporation usually can outspend and out-lawyer any citizen or group of citizens who oppose it. Our legislature (state and national) is mostly already bought and paid for by corporate interests. The VC Somner project failure is significant because it has the potential to reveal the interconneted complicity that has been filling the political and corporate coffers…you will see massive efforts by the legislators and the corporations to conceal the history and behind the scenes “solution” to this fiasco.

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  • John Clark

    Insightful article. Thank you. SCE&G average residential prices are 14% higher than the national average, 30% higher than the southeastern average, 34% higher than Duke Energy, and 38% higher than Santee Cooper. Why, why, why? Is it because SCE@G is the ONLY utility solely regulated by the SC Public Service Commission and whose residential ratepayers are represented officially ONLY by the South Carolina Office of Regulatory Staff? (Duke’s primary rate setting is handled by North Carolina regulators; Santee Cooper’s rates are governed by a Board of Directors appointed by the Governor and confirmed by the State Senate.)