PINOPOLIS — More than 164,000 Santee Cooper electric customers in eastern South Carolina could see power bills rise an average of 3.5 percent for two consecutive years starting in December under a plan unveiled Monday.
If approved in September, the higher rates would take effect Dec. 1 of this year and Dec. 1, 2013, and affect residential, commercial and industrial customers. The rate hike would not affect wholesale customers such as electric cooperatives.
The rate increase will be the state-owned utility’s first since 2009 and only the second since 1996.
For an average home using about 1,000 kilowatt-hours of energy, the electric bill will go up $5.60 per month the first year and an additional $8.29 per month the second year. The current average Santee Cooper residential electric bill is about $107.05.
Increased environmental regulations and the costs of building two new nuclear units with South Carolina Electric & Gas Co. north of Columbia are driving the need to raise rates, Santee Cooper spokeswoman Laura Varn said.
The utility abandoned the second of a proposed two-year rate increase in 2010 by cutting costs, refinancing debt and reducing spending on big-ticket projects, mainly after it scuttled plans in 2009 to build a new coal-fired power plant in the Pee Dee.
But Santee Cooper CEO Lonnie Carter said the Moncks Corner-based utility could cut no further.
“We are at a point now where we have to have a rate increase,” Carter said.
Without a rate hike, Santee Cooper will fall $17 million short of revenue in 2013 and another $31 million behind in 2014, according to Suzanne Ritter, vice president of corporate planning.
Santee Cooper owns 45 percent of the new $10 billion nuclear project in Fairfield County and its portion amounts to about $4.5 billion. Carter defended it as the clean alternative to coal-fired plants which are increasingly facing higher levels of environmental regulation and the higher costs that come with them.
“Nuclear power is virtually emission-free, and so these new units are critical as Santee Cooper diversifies its generation to better weather future environmental regulations and volatile fossil fuel costs,” Carter said.
SCE&G already collects an average of 2 percent to 2.5 percent in higher electric rates each year through 2018 to pay for its portion of the two new reactors. It has to submit its financing costs for the project each year to the Public Service Commission for approval, spokesman Eric Boomhower said. Its next filing is May 30.
SCE&G officials say its cheaper to pay for the nuclear project with rate increases as it is being built than to hit customers with significantly larger rate hikes when the units come online in 2017 and 2018, respectively.
Santee Cooper is trying to divest itself of 25 percent of its stake in the nuclear project after its biggest customer, Central Electric Power Cooperative, decided in 2009 to shift 1,000 megawatts of its load to Duke Energy beginning in 2013. Less demand for electricity and the decision not to build the coal plant also played into the decision to sell off some of its nuclear project.
Santee Cooper will hold a series of public hearings on the proposed rate hike June 21 through June 26 throughout its service territory in Berkeley, Georgetown and Horry counties and allow public comments during its Aug. 20 board meeting in Myrtle Beach.
Reach Warren L. Wise at 937-5524 or twitter.com/warrenlancewise.