Rate increases have been a rarity for customers of Santee Cooper, but that's about to change due to the cost of building new nuclear power plants.

The state-owned utility's board approved a budget Monday that calls for three years of rate hikes, starting at the end of 2012.

The electric rate is expected to increase 3 percent to 4 percent in each of those years, but the exact amount won't be determined until next year.

Santee Cooper has spent nearly $1 billion on a project to construct two new generating units at the V.C. Summer Nuclear Station. The utility hopes to receive a license for the reactors early next year.

South Carolina Electric and Gas, a partner in that project, has said its customers can expect rate increases of around 2 percent every year through 2019 to help pay for the units.

Unlike SCE&G, Santee Cooper does not need regulatory approval to raise rates. The utility's board will make the decision on the exact amount of the increase next year after further budget review and a public comment period.

The rate increase will impact residential, commercial and industrial customers, and municipalities but will not change the rate charged for wholesale power to the state's electric cooperatives, such as Berkeley Electric.

The increase comes at a time when Alcoa, whose Mount Holly aluminum plant employs 560 people, has threatened to shut down if it does not receive a rate reduction. Alcoa pays the industrial power rate.

"We remain optimistic that we can find a solution that will keep those 560 jobs," Santee Cooper President and Chief Executive Lonnie Carter told the Board of Directors, meeting at the Wampee Conference Center in Pinopolis.

Carter said Santee Cooper's industrial customers together account for about 7,200 jobs, and it's important to protect those jobs without shifting the cost burden to residential electric customers. Such a solution has so far eluded the utility.

Board Chairman O.L. Thompson, of Mount Pleasant, said the Alcoa discussion has given people the false impression that Santee Cooper has high industrial rates for electricity.

"We have some of the lowest rates in the Southeast," he said.

Santee Cooper is working on a plan to offer lower industrial rates to customers that create jobs, but only customers with new or expanding power demands would qualify. Details are still under discussion.

Alcoa pays about $4 million a week for electricity, and last month Bob Wilt, president of Alcoa Global Primary Products in the U.S., said the Mount Holly facility "has the highest power cost of any smelter in the United States."

For most residential customers, the monthly cost of the rate increases could be measured in the single digits. While the exact increase hasn't been determined, a 4 percent hike would mean another $6 a month for someone with a $150 electric bill.

The last time Santee Cooper raised rates was a 3.4 percent increase at the end of 2009. It was the only time Santee Cooper raised rates during the last 15 years, said company spokeswoman Laura Varn.

Santee Cooper serves 163,000 residential and commercial customers, mainly in Georgetown and Horry counties, with about 8,000 in Berkeley County. The utility serves about 30 industries, such as Alcoa and Nucor, and sells about half the power it produces to electric cooperatives.