- Economy
The goal is to ensure existing customers don’t end up footing the bill for new, power-hungry companies
South Carolina’s state-owned power company will start charging a special electricity rate executives say is meant to ensure energy-intensive data centers, built to serve the country’s ever-growing technology needs, are covering the cost of generating the massive amount of power they require.
The goal is to ensure existing customers don’t end up footing the bill for new, power-hungry companies.
The governing board of Santee Cooper voted unanimously Friday to implement the new rate for large, incoming customers on an “experimental” four-year basis, testing it out before considering whether they want to make the policy permanent. The change is effective immediately.
In a presentation to the board, Mike Smith, director of billing and pricing for the Moncks Corner-based utility, said he anticipates large customers coming into Santee Cooper territory could need as much as 1,000 megawatts of power as soon as 2030.
“That’s significant growth for a system the size of ours,” he said.
That growth rate mirrors the demand utilities are seeing across the Southeast, he said.
“We expect that to continue,” Smith said. “We don’t think it’s going to abate anytime soon.”
The new rate goes beyond data centers.
It applies to any customer requiring 50 megawatts of power or more, which would sweep in some of the electric vehicle and battery manufacturers under construction in the state. Those companies have reported energy needs between 100 and 150 megawatts, according to economic development officials.
Still, it’s data centers that have dominated the conversation around energy in South Carolina. These windowless buildings house rows of servers necessary for everything from artificial intelligence to high-speed financial trades. The largest of these centers can use as much as 200 megawatts each.
“We do welcome large loads because they’re good loads for the system. However, because of their size and operating characteristics, they’re difficult for Santee Cooper to absorb,” Smith said.
Santee Cooper’s new experimental rate comes as South Carolina grapples with how to meet the energy needs of a growing population, manufacturing base and, of course, an influx of data centers being built by tech giants such as Google, Meta and Blox.
A provision on the issue was inserted in legislation under consideration by the General Assembly.
Senate passes sweeping energy bill aimed at meeting SC’s growing power needs
In a late-night debate about two weeks ago, the Senate voted to limit tax and power-related incentives the state allows for data centers. Senate Majority Leader Shane Massey pushed for the change saying that as data centers come to South Carolina, he wants them to pay an equivalent share of the costs for power plants built to serve them.
In the weeks since the Senate vote, which amended a bill previously passed by the House with almost no opposition, data center developers have pushed back, said Geoff Penland, Santee Cooper’s director of government relations.
He said technology companies are worried about the loss of sales tax breaks they’ve historically received on both computer equipment and electricity.
Penland said it appears the House and Senate may reach a compromise on the matter with just two weeks left in the legislative session.
While Santee Cooper is largely unconcerned with incentives for data centers, the energy legislation is of the utmost importance to the utility as it seeks permission to partner with private utility company Dominion Energy on a possible 2,000-megawatt natural gas plant on the site of a former coal-fired power plant along the Edisto River in Colleton County.
And the board’s vote Friday means these new power rates will go into effect no matter what legislators ultimately decide on data centers.
Meeting a growing energy demand requires construction of expensive power plants, power transmission lines, as well as the purchase of extra power that Santee Cooper has to buy from other utility companies on occasion when it doesn’t have enough energy of its own.
Building and buying those things mean increased rates for all customers, even if those other customers aren’t the ones driving the need for those investments, Smith said. That’s what Santee Cooper is trying to curtail.
Smith pointed to a similar effort by Georgia Power Company, which asked utility regulators to develop special contractual terms for large users.
Under Santee Cooper’s new rate, large users must sign a 15-year contract, one they can’t get out of without paying a set minimum. The utility also will charge more for power used at times of day when demand for energy is at its highest.
Santee Cooper worries about the possibility that these large users, particularly data centers, could come on the grid and then leave before the utility is able to get back the money it spent to serve them, Smith said. The long-term contract aims to prevent that.
Finally, the new deals require large users to ramp up to their full contracted power usage within three years.
Santee Cooper suggest that would protect it from a company that comes in and oversells, saying they’re going to need 300 megawatts but ends up only needing 127 megawatts, as an example.
“Regardless of how many kilowatt hours this customer uses, if they come on the system, they’ll be accountable,” Smith said.
While the board ultimately all voted in favor of the change, two members who represent South Carolina’s power cooperatives, which get their power from Santee Cooper, raised concerns that no large customer would agree to these new terms.
They said Santee Cooper and rural electric cooperatives will lose potential new business.
They also worried about the speed with which the change was made. Santee Cooper staff will typically take 18 months to vet and implement a new, permanent rate. This change was studied over just a few months.
In an effort to allay concerns, staff told the board because of the rate’s “experimental” status, it could make changes at any point in the four-year trial period.
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