Utility seeking rate increase

PINOPOLIS — Power customers of Santee Cooper can expect higher bills starting this fall.

The state-owned utility's board of directors said Monday it will propose a base rate increase for electricity in April for the first time since 1996 to stave off a projected deficit.

If approved, the increase would take effect Nov. 1 after a series of public hearings this summer.

A rate hike could affect 135,000 residential customers and 30,000 commercial customers in Berkeley, Georgetown and Horry counties, 29 large industries and two municipal wholesale customers in Bamberg and Georgetown.

It would not affect the state's 20 electric cooperatives, which get their power from Santee Cooper under separate contracts.

While the actual rate has not been determined, Lonnie Carter, Santee Cooper's president and chief executive officer, said Monday it will probably range from 4 percent to 6 percent. Subsequent rate increases could follow in 2010 and 2011, if needed.

"It's too early to say if they will be the same each year," said Santee Cooper spokeswoman Laura Varn.

The rate increase is needed so the utility will not run out of money, she said.

"Because we have put off a rate increase for so long, we will have a deficit if we don't institute the base rate increase by November," Varn said.

Santee Cooper has been able to hold off increases in its base rate during the past 12 years by refinancing bonds to save $892 million and cutting operating and maintenance expenses by another $390 million last year alone, Varn said.

But the utility and the power generation environment have changed drastically since 1996, said Suzanne Ritter, vice president of corporate planning and bulk power.

The company now has 60 percent more customers, energy sales have doubled, fuel prices have escalated and emphasis is on the environment and energy efficiency, she said.

Santee Cooper has spent $2 billion on new facilities, added 2,300 megawatts of generating capacity and is slated to build 1,500 megawatts of additional power generation through coal and nuclear plants to meet future growth.

The utility plans to build a 600-megawatt coal-fired plant in Florence County at a cost of $1.25 billion, a project that has come under fire from environmental groups and the governor.

Santee Cooper is also joining Scana Corp. to build two new nuclear generators at their jointly owned V.C. Summer Nuclear Station in Jenkinsville.

Santee Cooper's share of the $10 billion expansion would be $4.5 billion.

"We will need to revise our base rates to maintain financial integrity," Ritter said.

The Pee Dee plant could come online in 2013, and the first nuclear unit is slated to begin producing power in 2016 with the second to follow three years later.

To cushion the financial impact on customers and meet the utility's goal of generating 40 percent of its energy by 2020 through environmentally friendly methods, the board voted Monday to spend more than $113 million over the next 12 years on rebates and other programs that promote energy efficiency for residential and commercial customers.

Those programs include handing out energy-efficient compact fluorescent light bulbs to replace incandescent bulbs and giving customers incentives to buy Energy Star-rated refrigerators and turn in their older models.

The board also approved a $2 million increase in its low-interest loan program to help customers install energy-efficient heat pumps and windows and add better insulation to their homes, for example. The new loan pool will be capped at $5.5 million.

"Even though rates are going up, your (power) bill doesn't have to," Carter said.

The energy-saving measures are meant to help the utility avoid the cost of building a new power plant to meet the demand for electricity that could come from a projected increase of 1 million new state residents by 2025, he said.

"If we don't measure this and make this real, we will spend $113 million for nothing and turn around and have to build another power plant," Carter said.

Reach Warren Wise at 937-5524 or wwise@postandcourier.com.