The Federal Energy Regulatory Commission (FERC) issued a stinging rebuke of a proposed southeastern energy marketplace this week – a decision driven in no small part by the testimony of South Carolina state senator Tom Davis.
The commission’s decision (.pdf) – issued on Tuesday – represented a major blow for the Palmetto State’s embattled government-run utility Santee Cooper, which was expecting to purchase power through this new network from Atlanta, Georgia-based Southern Company.
Southern, readers will recall, has engaged in offline negotiations with Santee Cooper for the past year-and-a-half in the hopes of supplying it with power generated by Plant Vogtle – where a pair of next-generation nuclear reactors are (or were) scheduled to come online in November 2021 and 2022, respectively.
“Southern should be concerned,” one industry source told me this week.
Indeed. Assuming the Vogtle reactors are ever finished, Southern desperately needs buyers for the power they will produce … while Santee desperately needs alternative power sources if it intends to make good on its promise to wean itself off of costly, environmentally unfriendly coal-fired power plants.
“Santee’s reform plan is up in the air again,” the industry source added.
Wait .. up in the air? That’s putting it kindly …
Santee Cooper is billions of dollars in debt because it tried –and failed – to build a pair of reactors identical to the ones currently under construction at Vogtle.
The collapse of the V.C. Summer nuclear expansion project – which my media outlet dubbed “NukeGate” – led to lawmakers soliciting offers to sell this debt-addled, chronically mismanaged agency (which I first proposed doing more than thirteen years ago). Unfortunately, a “Republican-controlled” S.C. Senate decided government should stay in the power generation business – even after squandering $10 billion on two abandoned reactors that will never produce so much as a watt of energy.
Gotta love GOP rule in the “reddest state in America,” huh?
Anyway, according to FERC the proposed “Southeast Energy Exchange Market” – which is being driven by Southern and Charlotte, N.C.-based Duke Energy – was deemed “deficient” for a host of reasons (including its alleged failure to advance renewables and its potential to invite “new market manipulation”). The utilities pushing the marketplace now have 45 days to submit a response to the ruling which addresses regulators’ concerns.
Otherwise, the proposal is kaput …
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In challenging the proposed marketplace, Davis wrote a letter (.pdf) to FERC calling for a “federal-state conversation on potential wholesale market reforms that might reinforce and facilitate state reliability, affordability and clean energy goals in the southeast.”
“At $145 per month, South Carolinians pay the fourth-highest electric bills in the nation,” Davis wrote. “This average monthly residential bill in South Carolina exceeds the national average by $30 per month, and is higher than any other southern state except Alabama.”
Alabama … where Southern enjoys an effective monopoly over two-thirds of the state?
Davis makes a fair point, though. As my news outlet has previously reported, low-income South Carolinians who receive their power from Santee Cooper and its network of “middlemen” are paying some of the highest energy bills in the Palmetto State. And a disproportionately large percentage of them reside in energy inefficient mobile homes – compounding the problem.
To address this issue, Davis argued state and federal regulators should hold a “technical conference” for the purpose of exploring the potential benefits of “utility participation in an independently operated regional transmission organization.”
Supports of such regional transmission organizations (or RTOs) said Davis’ comments were “clutch” given his emerging role as a regional advocate on this issue.
“Davis has spoken on competition in wholesale supply and independent power around the country,” one source told me. “Everyone knows his free market chops. This is about injecting free market principles into wholesale generation power markets and he is known nationally for his leadership on this issue.”
Davis has been backing a move to RTOs for years, penning a piece for this news outlet back in 2018 in which he argued such a structure would enable consumers to choose from “a menu of different types of power.”
Utility sources told me SEEM “does not preclude” the establishment of a regional transmission organization (RTO) in the future, and that the efficiencies created by this proposed network would result in significant savings for ratepayers. They also disputed the contention that SEEM would hamstring the development of renewables.
Earlier this year, a Southern spokesman told reporter Catherine Morehouse of Utility Dive that the proposed marketplace “would use technology and advanced market systems to automatically match participants with low-cost, clean and safe energy across a wide geographic area in the southeast.”
ABOUT THE AUTHOR …
Will Folks is the founding editor of the news outlet you are currently reading. Prior to founding FITSNews, he served as press secretary to the governor of South Carolina. He lives in the Midlands region of the state with his wife and seven children.
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