South Carolina’s Utility ‘Middleman’ Costing Ratepayers $700 Million

“A staggering sum …”

In recent reporting on the latest utility drama in South Carolina, I have raised questions about the redundancy of Central Electric Power Cooperative (a.k.a. “Central”) – a glorified middleman whose local utility customers are forced to pay some of the highest energy prices in America.

Central purchases approximately 60 percent of its power from the anti-competitive albatross known as Santee Cooper – which it then sells to its twenty member cooperatives (or co-ops). This power, as you might imagine, is not competitively priced – meaning member cooperatives pay inflated rates when they buy power through Central.

Central’s rates have gotten so oppressive that some member cooperatives have filed legal action seeking to extricate themselves from this anti-competitive structure (efforts I support, incidentally).

As I have covered the latest drama between Central and Santee Cooper, the questions I have been asking go to the heart of the superfluousness of this “middleman.”

Among those questions:

  • Why does Central exist?
  • Why can’t the rural cooperatives under its thumb purchase their power directly from Santee Cooper? Or on the open market?
  • How much money is Central’s totally superfluous existence costing South Carolina ratepayers?

This week, under withering questioning from state senator Nikki Setzler, we learned this middleman has vacuumed an estimated $70 million a year from Palmetto State cooperatives over the past decade in cost mark-ups and glorified membership dues.

That’s right, people … add it all up and Central has collected more than $700 million over the past ten years over and above what it is charging its member cooperatives for “wholesale power” (a.k.a. direct pass-through costs).

That is a staggering sum … one I plan on digging into deeper in future posts.

In addition to grilling Central on its mark-ups and membership dues, Setzler also drove home a fundamental hypocrisy on the part of the middleman’s leaders – who are seeking to avail themselves of alternatives to Santee Cooper’s high-priced power while at the same time denying such alternatives to their member cooperatives.

“Central wants purchase power options, correct?” Setzler asked during a legislative hearing earlier this week. “Do you give your twenty co-ops the purchase power options to purchase from someone other than Central?  Do you believe your co-ops should have the same choice as a customer that you have as a customer of Santee Cooper?” 

“You don’t want to be bound to someone else but it’s okay for your customers to be bound?” Setzler continued.  “Do they have an opt-out agreement like you have with Santee Cooper?”



Central leaders acknowledged individual co-ops do not have an opt out … hence the aforementioned legal action.

“Time to lay the cards on the table,” Setzler told Central leaders. “Co-ops need to ask the question of what Central is doing on their behalfs.”

Indeed …

As I noted last month, “as we contemplate the hundreds of millions of dollars at stake in this drama … we (should) take a long, hard look at the protagonists and assess whether some of them even need to be on the stage in the first place.”

By my count, there are at least 700 million reasons Central should not be on the stage …



(Via: FITSNews)

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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