By Lindsay Street, Statehouse correspondent | What if South Carolina could lower residential and commercial utility bills, close more coal plants and see more investment in renewable energy?
“A lot of people think that the only way to deal with climate change and reduce emissions is having the government act, but actually setting up a competitive market might get us there faster with significant savings and job benefits,” Coastal Conservation League Energy and Climate Program Director Eddy Moore said. “It’s not just a theoretical idea. It’s been done in other parts of the country.”
Utilities across the southeast, including South Carolina, operate as vertical monopolies in which they produce and transmit their own power to customers in a specified geographic territory. But a new study by Energy Innovation: Policy and Technology LLC, a nonpartisan energy and environmental policy firm in San Francisco, found that if the energy market is altered through public policy to create energy production competition, then utility customers would experience 23 percent lower utility bills as well as the quicker spread of renewable energy and as many as 285,000 new southeastern jobs over the next 20 years.
To reap those benefits, the energy market in the region would have to change to how two-thirds of the United States already gets its energy: by becoming a regional transmission organization (RTO). That’s where a public regional authority coordinates energy sales from energy producers based on a utility’s customers’ needs.
“(The report) confirms what you’d expect intuitively: If you’ve got competition among power producers, that’s going to benefit consumers,” said Beaufort Republican Sen. Tom Davis, a proponent of RTOs and the lead sponsor of 2019’s Energy Freedom Act, which allowed independent renewable energy producers to sell to utilities.
The report was published ahead of the legislature preparing to convene Sept. 15 to address the state spending plan and take up select bills that have passed one chamber. One of the bills that could be taken up is the creation of a committee to study the creation of an RTO.
While it may be a heavy lift with all eyes focused on the budget and pandemic response, RTO advocates say now is the time to greenlight the legislature’s study committee.
“Taking steps to reduce waste in the economy and to open it up to new technology and jobs, that can only help us in the COVID situation, and then with respect to climate we’re talking about doing something that will help the climate problem and save money at the same time,” Moore said. “We need to start taking that first step so we get there.”
‘Squeeze a lot of fat out’
The August Energy Innovation study, titled “Economic and Clean Energy Benefits of Establishing a Southeast U.S. Competitive Wholesale Electricity Market,” found that electricity rates would lower 23 percent over the next 20 years under an RTO model versus the existing model. And because inefficient power plants such as coal would be economically unviable, they would retire and reduce carbon pollution by up to 37 percent.
Other findings for the region, which includes Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina, and Tennessee, include:
- $384 billion in cumulative economic savings through 2040;
- An additional 285,000 new jobs in the sector versus 122,000 new jobs under the current model by 2040;
- Bigger investments in solar, wind and battery storage; and,
- All coal and most natural gas plants for peak use retired by 2040.
“It would squeeze a lot of fat out of the system,” Moore said.
In March, Duke University published a similar study with similar findings.
“We’ve had this monopoly system for almost 100 years, since we brought electricity to the rural areas of the state … You can’t just flip a switch,” Davis said, adding that understanding the impacts will be necessary. “It’s going to take a while to move us to where we are to where we should be.”
To begin the process, advocates say there needs to be a study committee authorized by the legislature.
The push to approve in September
The House voted 81-31 in February to pass H. 4940, a bill creating a state committee to study implementing an RTO. That was just weeks before the legislature went on recess as the state shut down for the pandemic, and the bill has remained in a Senate Judiciary subcommittee since then.
The committee would explore stakeholders’ issues and the “how” behind implementing an RTO, Davis said. It has a deadline of returning its findings to the legislature by Jan. 12.
“There’s a good chance of getting that bill pulled out of committee and put on the full calendar (in September),” Davis said.
For the Senate to take up a vote on H. 4940, there would need to be unanimous consent by senators.
“It’s not something that would take up a lot of debate. It could be done relatively quickly. It’s important to take it up in September,” Davis said.
But H. 4940 hit opposition on the House floor. Democratic Rep. Annie McDaniel of Winnsboro was among the 31 votes against it.
“I am not a proponent of always hiring consultants to come in and do studies,” she said, adding she was also worried about rural homes getting lost amid regionalization of power. “When you start regionalizing, it’s the rural people, the people who don’t have the money who lose out.”
Murrells Inlet Republican Sen. Stephen Goldfinch is on the Senate panel studying the bill.
“There’s very little harm in passing a study bill; what comes after it is the question,” Goldfinch said, adding he was more interested in private utilities setting up voluntary changes in the market.
Voluntary market exchange in the works
Utilities in the Southeast announced this summer they are exploring a centralized energy exchange that would be called the Southeast Energy Exchange Market (SEEM), according to Dominion Energy. The exchange would be voluntary and would meet energy demand nearly simultaneously across utilities.
“This proposal is the first of its kind in our region and is a low-cost, low-risk way to provide immediate customer benefits through a shared market structure,” Duke Energy spokesman Ryan Mosier said.
Companies exploring the energy exchange market in South Carolina include Duke Energy Carolinas, Duke Energy Progress, Dominion Energy South Carolina and Santee Cooper.
“SEEM would create immediate benefits for customers through a shared market structure,” Dominion Energy public affairs manager Rhonda O’Banion said.
But the voluntary market is not exactly an RTO, which can also be implemented alongside such a proposal.
RTO proponents have expressed concerns about transparency and pricing in such a system. In a July 30 column for Utility Dive, RTO attorney Steven Shparber said that while SEEM could reduce the cost of wholesale electricity, it may not decrease utilities’ capital projects or provide “substantial benefits to customers and renewable resources.”
“The existence of the SEEM proposal should not stop the discussion currently taking place related to wholesale power market reform in the Southeast — and particularly in the Carolinas — as SEEM does not appear likely to significantly reduce customers’ bills or help to integrate renewables compared to other options that are available and which should be explored in more depth,” Shparber wrote.
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