Dive Brief:
- Electricity users in South Carolina could save as much as $362 million if the state joins the PJM Interconnection and $187 million if a southeast regional transmission organization were established, according to a Brattle Group report commissioned by the legislature’s Electricity Market Reform Measures Study Committee.
- Other options Brattle recommended the state consider include authorizing the South Carolina Public Service Commission and regulated utilities to explore options for expanded retail rate choices such as green tariffs and giving large commercial and industrial customers the ability to negotiate rates.
- The report “is a game-changer for the southeast,” Southern Environmental Law Center senior attorney Nick Guidi said in an interview. “This is really the first movement that any state in the region has made toward exploring [an RTO], in this sort of depth and with an official state sanction.”
Dive Insight:
“In a region of the country that has some of the highest electricity bills,” the potential for yearly consumer savings could have a “huge” impact for customers, Guidi said.
Retail electricity in South Carolina cost 9.96 cents/kWh in 2021, according to the U.S. Energy Information Administration. That’s less than in Alabama, Florida and Georgia, but more than customers pay in North Carolina, Tennessee, Texas and Virginia.
In addition to the cost savings, the potential for reliability improvements is particularly significant, especially following Winter Storm Elliott, he said.
Around 500,000 Duke Energy customers in North and South Carolina were left without service during the December storm, due to unprecedented rotating power outages that were deployed to stave off potentially longer and larger blackouts.
An RTO that allows utilities to import power could help utilities in the southeast avoid the situation that arose during Elliott, Guidi said, during which Duke Energy, the Tennessee Valley Authority, and Southern Energy were competing to buy power “from outside their territory.”
“PJM had issues with its generators, but ultimately didn't have any outages,” he said. “Same with MISO in the middle of the country. So it's something that I think is more salient right now, just given the recent experience of Winter Storm Elliott.”
PJM experienced widespread power plant failures during Elliott, with many of its plants failing to meet their capacity obligations, but said in a frequently asked questions document from April that “operators deployed demand response resources and customer conservation when generators failed to perform.”
The Brattle report said the Southeast Energy Exchange Market, a platform for utilities in 11 Southeastern states to buy and sell power to each other, was not as effective as an RTO would have been, and its performance during Elliott was criticized “as volume of cleared energy was negligible during the storm.”
“The functionality of SEEM is limited compared to other regional market options,” the report said. “SEEM does not issue dispatch instructions, does not optimize generation dispatch, manage transmission congestion or facilitate reserves sharing between its utility members.”
In a joint news release from the Conservation Voters of South Carolina and Coastal Conservation League, CVSC executive director John Tynan said that a more competitive energy market in the state is “the next logical step in a series of free-market oriented reforms enacted by the General Assembly in the wake of the 2017 Nuclear Debacle,” referring to the canceled V.C. Summer nuclear project.
The project went billions over budget before being scrapped in 2017 and ratepayers “were burdened with the bills that came out of that,” Guidi said, leading the legislature to investigate potential reforms to the wholesale market.
“That was back in 2017, so it's taken a little while to come this far,” he said. “It really kind of took a catastrophe for South Carolina to look into it, but if that's what it takes to create these types of savings for ratepayers, then that’s what it takes.”
