Slower than expected growth in the demand for electricity, combined with continuing costs to help build a nuclear power plant in Jenkinsville, has Santee Cooper’s board of directors considering a rate increase that would occur over the next three years.
All customers — residential, industrial, commercial and municipal — of the Moncks Corner-based electric utility would see average rate increases of 2.7 percent per year over the next three years.
The increases would amount to an extra $7.70 per month by the end of the three-year period — $4.50 per month the first year, $2 the second year and $1.20 the third — for the average Santee Cooper residential customer using 1,000 kilowatt hours of electricity per month.
If approved, the rate increase would start with the April billing cycle. A series of public hearings on the proposal will be held next month and a final vote is scheduled for December.
“We’re making sure that our rates are in a position where we don’t have one group of customers subsidizing another,” said Lonnie Carter, the utility’s president and CEO. “I know for our customers, any rate increase is a lot. But considering what we’re doing and the long-term plan, we have to make sure we continue to provide low-cost power, I feel pretty good about where we are.”
Carter said Santee Cooper’s electric rates still will rank among the lowest in the Southeast.
“If you compare us to others who are doing the same thing, our increase isn’t as much,” Carter said.
SCE&G, for example, has proposed a nearly 2.8 percent rate increase to start in October as part of 10 years of annual rate hikes scheduled through 2018. SCE&G customers have seen electric rates rise 14 times over the last seven years. Santee Cooper’s last rate increase was in 2013.
Santee Cooper and SCE&G are co-owners of the Summer Nuclear Generating Station in Jenkinsville, and debt-servicing costs for construction of two new nuclear units there will increase by $45 million for Santee Cooper between 2016 and 2018.
“If it wasn’t for that increase in debt service, we wouldn’t be here talking to you about a rate adjustment,” said Mike Brown, Santee Cooper’s vice president for wholesale and industrial service.
Brown said the rising debt and lower demand would result in a revenue shortfall for the utility if rates are not increased.
“The economic recovery from the last recession has been slower than expected but it has also varied among our customer classes, which brings us to a revenue shortfall that begins in 2016,” he said. That shortfall would be $31 million in 2016 and would grow to $48 million by 2018.
Santee Cooper proposes increasing the monthly fee its residential customers pay from the current $14 to $17 in 2016 and then $21 in 2018. The proposal also would increase per-kilowatt hour rates for all customers and boost the differential in rates residential customers pay in the summer as opposed to the winter.
The utility also is considering expanding its electricity buyback program for customers with rooftop solar panels, allowing commercial and industrial customers to take part. Customers still would have to pay for Santee Cooper’s fixed costs of bringing electric service to their home or business, but would be paid for the fuel costs that area avoided when customers use home-generated electricity. That currently amounts to about 4 cents per kilowatt hour for residential customers.
Those affected by the proposed rate increase include Santee Cooper’s 172,000 residential and commercial customers in Berkeley, Georgetown and Horry counties. The utility also provides electricity to 20 electric cooperatives throughout the state that serve 760,000 customers. Those cooperatives set their own rate schedules.
Reach David Wren at 937-5550 or on Twitter at @David_Wren