On October 16, the Santee Cooper Board of Directors will meet to hear final comments on its proposed 3-year rate increases, including a new rate schedule for solar customers that will be one of the most punitive in the country if adopted. This plan flies in the face of recent efforts in South Carolina to change the state’s status from a laggard on solar development to one that is actively promoting the growth of clean, renewable energy from the sun, and masks the financial troubles the company is facing due to cost over-runs and delays at its V.C. Summer nuclear plant units.
As the result of 2014’s Distributed Energy Resources Act, solar development in the territories of Duke Energy and South Carolina Electric & Gas (SCE&G) will jump from the currently installed 5.4 megawatts (MW) to 195 MW by 2021. But Santee Cooper, which has seen almost no solar adoption thus far among its 169,000 retail customers, adopted an Interim Distributed Generation Rider, “DG-15,” on August 24 that imposes new, highly discriminatory charges on its solar customers that net meter their electricity production. Santee Cooper’s next proposed step is to adopt a longer-term Distributed Generation Rider, “DG-16,” which if passed would go into effect on April 1, 2016 and would increase solar charges even further – effectively curtailing any future rooftop solar development in the utility’s territory. Specifically, Santee Cooper plans to enact an additional monthly metering charge of $9, a monthly stand-by charge of $4.70 – $5.00 per kilowatt of solar installed, and reduce credits to solar customers for power they contribute to the grid.
SACE and other advocates have submitted comments to Santee Cooper demonstrating that the current and proposed charges for homes and businesses that install rooftop solar systems are unjustified, will generate miniscule revenues for the company, and are likely illegal under the Public Utilities Regulatory Policy Act of 1978 (PURPA). They will add $361 a year in new charges for homeowners with an average-sized solar system of 4.5 kW – at a time when new solar customers in Duke’s and SCE&G’s territories have been guaranteed that they will not face any solar-specific charges until at least 2025. South Carolinians from across the state that want to see solar take hold need to let Santee Cooper know that this plan is unacceptable. The first step is to attend the October 16 Public Comment meeting in Pawley’s Island.
Santee Cooper’s new solar charges are unjustified: solar customers do not cause an unfair shift of costs on to non-solar customers
In their response to the comments SACE submitted on DG-15, Santee Cooper stated, “the proposed DG-16 Rider was designed after a thorough evaluation of rate structure alternatives that avoid cost shifts from customers who choose to install distributed energy resources to those who do not.” This statement is patently untrue. While the utility did complete a 2015 Electric System Cost of Service and Rate Design Study, this study did not include a specific analysis of the costs and benefits of generation from customer-sited solar systems. Yet in order to determine that allowing customers to make choices about what they do on their own property, with their own financial resources, is unfair or imposes unjust costs on other customers, Santee Cooper must find a significant violation of ratemaking principles.
Such a study would be difficult to undertake, given that (according to the U.S. Energy Information Administration Form 861S) in 2014 there were precisely 2 residential customers and 1 industrial customer with net-metered solar photovoltaic (PV) systems in Santee Cooper’s service territory. However, relevant cost-benefit analyses of distributed energy resources, and specifically solar power, have been conducted across the country – many with the goal of investigating the cost-shifting question. An April 2015 update on national distributed solar policies from the NC Clean Energy Technology Center summarized the findings to date: “[t]hus far, no consensus on the presence or absence of a cost shift [between solar and non-solar customers] has been reached based on empirical evidence.”
In neighboring North Carolina, a 2013 study analyzed the costs and benefits of both wholesale and distributed solar generation and found that based on the midpoints of the ranges of estimated costs and benefits, the benefits of rooftop solar are 30% greater than the costs. As observed in the study, solar distributed generation reduces the demand for electricity from the grid, and therefore reduces the cost of fuel for utility providers. Such publicly accessible studies should be considered a model for Santee Cooper to conduct a transparent analysis, engaging all stakeholders in a meaningful discussion about the impacts of solar self-generation by customers. Unilaterally imposing charges that are among the highest in the nation – and at the same time paying for excess power produced by distributed PV systems at a rate that is less than 1/3 of the retail rate – undervalues solar power and unfairly constrains customer choice.
What are the new solar charges really about?
Santee Cooper customers should also be taking a hard look at the other rate changes proposed for 2016. For residential customers, the proposed rate adjustment would increase rates across all customer groups by an average 2.7 percent each year over a three-year period. Specifically, the proposal recommends increases of an average 5.3 percent in 2016, 2.1 percent in 2017 and less than 1 percent in 2018. The rate design study cited above notes that the major factors driving the rate increase include: (i) Continued construction of Summer Nuclear Units 2 and 3, in which the Authority retains a 45 percent ownership stake, (ii) Slow to moderate load growth, and (iii) A projected shortfall in revenue.
More than two years ago, The State called attention to Santee Cooper’s unsuccessful efforts to find a buyer for part of its stake in two nuclear plant units being built jointly with SCE&G at the V.C. Summer Nuclear Station. Last month, SCE&G received permission from the Public Service Commission to raise electricity rates by more than 2.5 percent for residential customers and up to 3 percent for commercial customers beginning October 30 – the 8th rate increase to pay for the company’s share of the plants. Because of poor planning by Santee Cooper, its customers are also bearing the cost for new nuclear reactors that are $1.1 billion over budget and delayed by at least 3 years. Yet rather than address the real issues behind the company’s financial troubles, Santee Cooper is taking aim at the handful of customers who have chosen to install solar systems.
Santee Cooper: a study in greenwashing
Santee Cooper’s website and outreach materials cite its role as “South Carolina’s leader in generating electricity from renewable resources.” Yet only a miniscule 3.4 MW of its portfolio come from solar. The company’s five solar demonstration projects in the state, and in particular the 2-kilowatt solar systems installed on 27 schools through the Green Power Solar Schools program, are certainly to be commended. But this falls far short of the potential for solar in South Carolina, and the new rate increase will choke off further growth by making it uneconomical to install solar power. As noted in comments submitted by The Alliance for Solar Choice (TASC), while the proposal does guarantee fixed cost revenue “from a handful of customers representing less than 1/10th of 1 percent of all customers, it also guarantees that solar uptake in Santee Cooper’s territory will not occur in any meaningful scale, providing no benefit to either customer-generators or the Santee Cooper system.”
As a state-owned utility, Santee Cooper answers to no one but its own board, and thus customers have no effective opportunity to intervene in rate-making decisions of this kind, other than to submit comments and make themselves heard at public comment periods like the one taking place on Friday. Santee Cooper is flouting an approach to growing the solar market that Governor Nikki Haley and the state legislature have laid out for South Carolina. Already, companies like Sunrun have announced plans to establish operations throughout the state, adding new permanent jobs and giving customers a new way to finance solar through leasing arrangements with 3rd-party providers that bear the upfront cost of purchasing and installing the system as well as the long-term cost of maintaining it. Except that won’t happen in Santee Cooper’s territory under the unfair and punitive rate structure currently in place and proposed to continue.