South Carolina residents pay the highest average electric rates in the South, and the largest electric companies in the state are seeking rate increases.
The Palmetto State had the highest average cost in 2012, compared to North Carolina, Georgia, Florida, Alabama, Mississippi, Tennessee, Louisiana, Arkansas and Virginia.
To find a state with a higher average residential power cost than South Carolina, a person would have to head north as far as Maryland, or west to Nevada, according to the U.S. Energy Information Administration.
That trend continued this year.
In neighboring North Carolina and Georgia, residents on average paid $10 a month less than their South Carolina counterparts this year through April, according to the most recent data from the EIA, assuming 1,000 kilowatts of power each month.
Duke Energy serves most of North Carolina, and more than a quarter of all South Carolina homes through Duke Energy Carolinas and Duke Energy Progress. The company says the high average cost in South Carolina is not because of Duke Energy companies.
“Our rates over time have continuously been very competitive, both nationally and regionally,” said Ryan Mosier, South Carolina spokesman for Duke Energy.
While Duke’s rates in South Carolina are currently lower than the average rate in every coastal state from Maine to Mississippi, that soon could change. Duke Energy Carolinas this year requested a rate increase that would hike residential bills nearly 18 percent.
Duke is negotiating the request with regulators.
The Duke companies and South Carolina Electric & Gas Co., the state’s other large regulated utility, each control about 28 percent of the market.
While Duke Energy Carolinas and Duke Energy Progress charge rates that are lower than the state average, SCE&G’s rates are much higher, raising the average cost statewide.
The Duke Energy companies serve the Upstate and northeast South Carolina, while SCE&G provides power in areas from the Midlands to the coast.
Compared to Duke, SCE&G charges 38 percent more for power.
Company Chairman and CEO Kevin Marsh said part of the difference is because SCE&G has been building new generating facilities — a cost that’s reflected in electric rates — while Duke benefits from ongoing low costs for nuclear fuel to run facilities built in the 1970s and ’80s.
“We’re taking the long-term view,” said Marsh, whose company is building new nuclear reactors.
SCE&G is seeking approval for a 3.1 percent increase in residential rates this year.
Currently, an SCE&G residential customer would pay $456 a year more than a Duke Energy Carolinas customer for the same amount of power, based on 1,000 kilowatts per month.
“It’s a big difference,” said Dukes Scott, executive director of the S.C. Office of Regulatory Staff, which represents the public in rate hearings. “This is sad to say, but we cannot give a definitive answer as to why SCE&G is so much higher than those other utilities.”
He said rates between different utilities tend to see-saw over time, as companies build new facilities and rely on different types of fuel for power. SCE&G officials made similar comments during interviews.
“If you look over time, we haven’t always been the highest, and we won’t always be the highest,” said Eric Boomhower, SCE&G public affairs manager. “The reality is, it’s constantly changing.”
“It’s very difficult, if not impossible, to do an apples-to-apples comparison between utilities’ rates because there are so many variables,” he said.
Georgia and the Carolinas together have 250 electric companies, ranging from huge investor-owned utilities with regulated rates to tiny municipal systems.
In between are some power cooperatives such as Santee Cooper, which is well-known in the Greater Charleston area but serves just 6 percent of state residences. Santee Cooper raised its residential rate by 5.3 percent last year, and it will rise by another 6.6 percent this year.
The rates customers pay have much more to do with the utility that serves them than the state they live in. A January report of the rates charged by 17 municipal electric systems in South Carolina showed that a residential customer could pay anywhere from $95.52 in Georgetown to $137.54 in Westminster for the same amount of power.
Eric Budds, deputy executive director of the Municipal Association of South Carolina, said some of the municipal power systems in the Piedmont area, such as Westminster, have long-term power purchase contracts, and debt expenses related to those deals.
“They got into the purchase agreements during the (1970s) energy crisis, and bought in long-term,” he said.
With investor-owned utilities, subject to rate approval, the prices are influenced by the way power is produced, the fluctuating costs of fuel, a company’s cost structure, expenses ranging from tree-trimming to nuclear power plants, and the return on investment levels that regulators approve, which in South Carolina tends to be above the national average.
Duke’s rate request is an unusually large one, averaging more than 15 percent for all rate classes.
“It’s (related to) investing billions in improving the reliability and efficiency, and in making power plants cleaner,” said Duke’s spokesman, Mosier. “Once the assets are up and running, we have to seek to pay for them.”
Scott, at the Office of Regulatory Staff, said utilities regularly ask for more than they expect to get, and get less than they request.
“We try to hold them down as much as possible,” said Scott. “I know people think enough is enough and they should get zero, but in the (S.C. Public Service) commission’s defense, that’s not going to hold up.”
Reach David Slade at 937-5552 or Twitter @DSladeNews.
Power lines along Azalea Avenue in North Charleston on Friday July 5, 2013. South Carolina residents pay the highest average electric rates in the south, and the largest electric companies in the state both have rate increase requests pending.SCE&G, is the reason the Palmetto State had the highest average electric rate south of Maryland and east of Nevada. Leroy Burnell/Staff×
Power lines along Coming Street in Charleston on Friday July 5, 2013. South Carolina residents pay the highest average electric rates in the south, and the largest electric companies in the state both have rate increase requests pending.SCE&G, is the reason the Palmetto State had the highest average electric rate south of Maryland and east of Nevada. Leroy Burnell/Staff×