Dive Brief:

• The South Carolina Public Service Commission (PSC) ruled in favor of South Carolina Gas & Electric (SCE&G) last Wednesday, denying four petitions for rehearing or reconsideration of annual rate proposals that the PSC approved at the beginning of May.

• SCE&G dropped its avoided capacity cost rates, paid to small solar facilities between 100 kW and 80 MW, to $0 per kW-year. Opponents say this removes an important incentive for solar and violates the Public Utility Regulatory Policies Act (PURPA), which directs utilities to purchase power from independent suppliers. 

• In another blow to solar development in South Carolina, the state's Senate failed to pass a pro-solar bill after procedural changes requiring a two-thirds vote in April. The bill sought to remove caps on the state's residential solar market.

Dive Insight:

Last year, SCANA Corp., the parent company of SCE&G, and the state-owned utility Santee Cooper scrapped the planned expansion of nuclear reactors at V.C. Summer, but reports indicated that the utilities had touted the cost-effectiveness of their planned reactors for months after discovering that the costs for the behind-schedule project were skyrocketing.

The nuclear project's partial construction led to rate hikes for SCE&G's customers that continue to face legal challenges.

Solar-industry representatives and conservation groups viewed smaller power providers as a means to lower utility bills for SCE&G's customers. At the heart of their petitions for the new rates, they criticized SCE&G for undervaluing the qualifying facilities (QFs) and taking away an incentive for them to sell their power to the utility.

The PSC voted 6-to-1 to deny the petitions for rehearing, including one from the state's consumer watchdog, the Office of Regulatory Staff. 

Regulators said they had already "implicitly or explicitly" determined each part of SCE&G's new rate structure is just and reasonable, and therefore in compliance with PURPA.

"Had SCE&G not revised its avoided costs rates, SCE&G's customers would be paying solar QFs more than SCE&G's actual avoided costs, which is contrary to the explicit intent of PURPA," Aimee Murray, spokesperson at SCANA, the utility's parent company, said via email.

The Southern Environmental Law Center (SELC), which represented the South Carolina Coastal Conservation League and the Southern Alliance For Clean Energy in one of the PSC petitions, said in a press statement that the new rates prevented inexpensive solar power from reaching customers.

In addition to energy payments, SCE&G paid small solar facilities $21.34 per kW-year in 2016 for the costs that the utility avoided by increasing its own generation, particularly during peak load times. In 2017, that rate dropped to $6.35 per kW-year, according to SCE&G's testimonies during the proceeding for the annual rate-setting review.

The current rate for 2018, which will only be effective for one year, is $0 per kW-year.

SELC is "still evaluating possible next steps" with clients, spokesperson Emily Driscoll told Utility Dive on Friday via email.