Santee Cooper's electric rates will rise sharply as the bills for its failed nuclear project come due, more than doubling the monthly payments its customers make into the unfinished reactors.
That's the finding of a new study of Santee Cooper’s future rates by a conservative think tank — and the utility's own estimates.
The new projections begin to clarify just how much Santee Cooper’s customers will pay for the scuttled V.C. Summer nuclear project. The utility's rates trickle down to about a third of South Carolina’s electric users through the state's cooperatives.
Already, Santee Cooper customers pay about $5 a month into the nuclear project, or 4.5 percent of their electric bills. Nuclear costs will be cooked into their rates for nearly four decades while the utility pays down its debt.
The question is, how much will their monthly bills rise?
Santee Cooper said Tuesday that it expects its electric rates to increase by another 7 percent to 8 percent as more debt comes due. Spokeswoman Mollie Gore described that estimate as the result of a "recent preliminary analysis." That would be about $8 or $9 more per month.
The utility says it won't increase electric rates until 2020 at the earliest.
The Moncks Corner-based power provider, which is owned by the state, released those figures in response to a study released Tuesday by a group that wants the government to sell it.
The Columbia-based Palmetto Promise Institute said earlier in the day that it expects Santee Cooper’s rates to increase by at least 11.7 percent because of the nuclear project. That works out to another $14 a month.
The group says that figure could go even higher depending on how Santee Cooper uses the nearly $900 million it received in a settlement with the nuclear project's contractors. And it could go higher still if ratepayers take steps to use electricity because the utility's debt would be spread across fewer electricity sales.
The diffuse structure makes it difficult to say exactly how much each electric user is paying into the nuclear project, but the researchers who wrote the Palmetto Promise study say rates will soar if co-ops' ratepayers get out of their share.
"If they don't, they can get really high, really fast," said Katie Player, a Furman University economist who co-wrote the study.
The co-ops moved last month to sue Santee Cooper, saying they should not have to pay for the reactors since they’re not producing power.
Palmetto Promise, which was founded by former U.S. Sen. Jim DeMint, says its estimates offer new evidence that the power company should be sold to a private-sector buyer. Oran Smith, the group's senior fellow, described the nuclear charges as "nearly criminal" and "harmful to real people at the meter."
The outrage over rates tied to the nuclear reactors has boiled over since the construction project was called off last July. Santee Cooper and its partner, South Carolina Electric & Gas, spent $9 billion before walking away.
Much of the focus so far has centered on Cayce-based SCE&G, an investor-owned utility. The company charges its ratepayers about $27 a month for the nuclear project, or 18 percent of bills.
The emphasis on SCE&G's rates is owed partly to its structure, which gives it more wiggle room. Lawmakers have called for SCE&G to slim its profit margin, for instance, or cut off its quarterly dividend payments to investors in an effort to reduce the cost to customers.
Santee Cooper doesn't have those options.
The utility is undertaking some cost-cutting measures to stave off a rate increase, but it can't swallow the debt altogether because it doesn't have shareholders or a profit margin. Palmetto Promise went so far as to call for the utility to file for bankruptcy to reduce its financial obligations.
Santee Cooper says it has some of the lowest electric rates in South Carolina in spite of the nuclear project, but the reactors will be embedded in its rates for decades. The last of the nuclear debt won't come off its books until 2056.