It’s no secret there is an ongoing “power war” taking place in the South Carolina Lowcountry between spectacularly mismanaged government-run utility Santee Cooper and Century Aluminum, one of the largest private sector employers in the Palmetto State.
The battle lines – which were drawn in a recently filed lawsuit – revolve around the obscenely high, anti-competitive rates the state-owned utility is charging Century for electricity.
How anti-competitive are these rates? So high local governments have stepped in on Century’s behalf – backed by local voters. As we reported back in December, voters in Goose Creek, S.C. overwhelmingly approved a public referendum that would create a new city-run utility. This structure was created for the sole purpose of bypassing Santee Cooper’s exorbitantly high power prices – enabling Century to purchase the 25 percent of its power that current comes from the government-run utility on the open market instead.
Per the agreement, Century would consent to having its property annexed by the city – bringing an estimated $1 million in annual property tax revenue into Goose Creek’s coffers. The city would then purchase power on the open market and sell it to Century at cost.
Santee Cooper was not about to let that happen, though … and so Goose Creek was forced to file a lawsuit this spring asserting its rights under the law.
Late last week, Century president and chief executive officer Mike Bless discussed the situation on a call with analysts – noting how his company’s forced reliance on purchasing Santee Cooper’s power (nearly half of which comes from inefficient coal-fired plants) continues to be “unnecessarily uneconomic.”
“Breaking this log jam with the legacy power company is the only thing that stands in the way, and solving this would enable Mount Holly to operate at full capacity,” Bless said on the call, according to a report from David Wren of The (Charleston, S.C.) Post and Courier.
Full capacity … and full-employment.
Readers will recall that the punitively high cost of purchasing power from Santee Cooper forced Century to cut production at its Berkeley county facility by fifty percent back in December 2015 – resulting in 300 layoffs.
“The company believes it can bring back these 300 workers (and ramp up its production again) if it is able to purchase all of its power on the open market – which is what the new Goose Creek utility would enable it to do,” we reported in December.
The latest comments from Bless certainly reinforce this contention, and make no mistake: In our current coronavirus climate these jobs would be more valuable than ever.
Santee Cooper, however, is doing everything it can to block Century from finding cheaper power – arguing it has the “exclusive right and obligation” to continue supplying the company with energy at inflated rates. In fact, Santee Cooper is continuing to claim that if Century were able to find more cost-effective options on the open market, such a move would “force other (Santee Cooper) customers to subsidize the smelter’s electricity costs.”
In other words, it is threatening to raise prices on other commercial and residential customers if it is unable to continue imposing its punitively high charges against Century.
Curiously, Santee Cooper is continuing to issue these threats after formalizing a four-year “rate freeze” in connection with a recent ratepayer settlement.
We wonder: Is Santee Cooper already breaking the terms of its agreement?
(Click to view)
(Via: Santee Cooper)
Also worth considering? Now more than ever, Santee Cooper is locked into charging higher electricity rates due to the cancellation of the Atlantic Coast Pipeline last month. The decision to scrap this key natural gas artery was nothing short of a death blow for the utility – which has vowed to save $2.7 billion over the next two decades via “a greener energy mix and other efficiencies” as part of its so-called “reform plan.”
This “greener mix” was to include the shuttering of four coal-fired units at the Winyah Generating Station in Georgetown, S.C. beginning in 2023 – plans which are now up in smoke.
“The utility is (now) locked into the production of dirty, expensive energy for decades longer than it previously anticipated,” we noted in a previous post.
Which means Santee Cooper has absolutely no room to negotiate on price with Century.
This news outlet has consistently supported Century in its bid to find cheaper power – just as we have consistently criticized Santee Cooper for its ongoing lack of competitiveness, arguing the “failure of the state-run utility to provide competitive pricing” was the root cause of this situation.
Bigger picture? We have advocated – and will continue to advocate – for the utility to be offloaded to the private sector where its inefficiencies are no longer a drain on ratepayers and taxpayers.
Frankly, we are shocked lawmakers have yet to make this move seeing as we are more than three years removed from Santee Cooper’s starring role in the $10 billion NukeGate debacle – another command economic failure.
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