Energy ‘reform’ bills potential shock to ratepayers’ wallets

Update: 4/4/2025: On Thursday the Senate approved H.3309 with several amendments. This analysis reflects the bill in its original form before proposed Senate amendments. The amendments adopted by the senate would:

Remove the consideration of economic impact and public interest from Public Service Commission responsibilities, resulting in the PSC adhering to their original mission which is protecting rate payers, a welcome change.
Move the Governor's Nuclear Advisory Council to be housed with SC Nexus, resulting in a focus on Nuclear energy rather than renewable energy by SC Nexus, potentially altering the direction of the EPI as well.
Require data centers to go through their own rate process so that extra costs related to data centers are not passed on to individual rate payers. Data centers will have to enter into contracts that require them to pay for fuel, generation, and transmission costs along with any other unrecovered costs.
Raise the investment requirement of data centers for tax exemptions, effectively eliminating the incentives program for new data centers going forward.

South Carolina’s House of Representatives has passed an enormous energy bill again, with this year’s H.3309 resembling failed energy legislation of previous years.

The 2007 Base Load Review Act, which was repealed in 2018, resulted in higher rates for customers along with the $9 billion failure of the V.C. Summer nuclear construction project in Fairfield County. In 2025, the Legislature is considering language that effectively would resurrect the Base Load Review Act, leaving ratepayers on the hook again for upfront construction costs of energy plants.

H.3309 is the House’s approach to meet increasing energy demands and expanding access to nuclear, natural gas and renewable energy sources. Their intention is to cut red tape on approval for energy projects, but the bill could leave ratepayers on the hook for projects again, paying heightened rates for construction that may never be completed.

What will H.3309 do?

This bill, titled the “South Carolina Energy Security Act,” would allow state-owned Santee Cooper and privately owned Dominion Energy to jointly participate in a state-approved monopoly on natural gas with the building of a 2,000-megawatt facility in the Canadys area of Colleton County. Approval by the Public Service Commission is still needed before construction begins.

Construction of this facility could require utilities to upgrade miles of electric power lines, and an undisclosed amount of rerouted and upgraded fuel pipelines from the Port of Savannah. The bill, however, addresses the development of one large plant, though smaller facilities might be feasible and strategically advantageous.

Santee Cooper is empowered under the bill to incur further debt for the construction – even as Santee Cooper customers for years will be repaying debt from the failed V.C. Summer nuclear project.

And the debt burden for those customers likely would be amplified under a separate bill, S.51, which would solicit proposals for the revival of the V.C. Summer expansion project.

While taking on debt is not inherently negative, Santee Cooper must ensure it does not pass any construction-related costs to ratepayers before any energy project is completed.

Under H.3309, energy projects would be automatically approved after six months, preventing regulatory or environmental challenges from causing years of unnecessary delays – a positive reform that promotes efficiency and growth.

Individuals who believe their property rights were violated with project approvals could directly appeal to the S.C. Supreme Court under the bill, instead of going through the Court of Appeals, which is the state’s second-highest court.

Update 4/4/2025: The Senate amendments would send appeals to the Administrative Law Court, with those decisions being appealable to the S.C. Supreme Court.

The Energy Policy Research and Economic Development Institute (EPI) will be created via the University of South Carolina. The EPI will advise the General Assembly on energy policy and economic development, overseen by a board comprised entirely of legislators.

The bill also mandates the Office of Regulatory Staff and electric utilities to produce a 10-year energy plan, which would centralize energy planning but also would potentially negatively influence market competition and pricing.

And the cost of the bill to S.C. taxpayers wouldn’t be cheap. According to an estimate by the S.C. Revenue and Fiscal Affairs Office, the total taxpayer cost of the bill’s proposed changes would be nearly $6 million for new employees, salaries, and additional funding for numerous agencies.

‘Redefined’ Public Service Commission

Update 4/4/2025: The Senate amended version of H.3309 removed "public interest" and "economic impact" from the responsibilities of the PSC, diverting the PSC's mission back to protecting individual ratepayers rather than economic development. However, the bill still allows the PSC to declare an emergency to bypass the approval process for immediate construction on existing/abandoned facilities if deemed a public necessity or convenience, effectively superseding the Senate's effort to ensure the PSC protects individual ratepayers. Big corporations will still be able to shop utility providers and receive discounts, despite the strengthened requirements for data center tax incentives.

Currently, the Public Service Commission serves to ensure rate increases benefit the rate payer, with their mission statement being “to serve the public by providing open and effective regulation and adjudication of the state's public utilities, through consistent administration of the law and regulatory process.” 

But H.3309 alters that mission by inserting broadly defined economic development duties, transforming the PSC into an energy and economic planning commission. This will result in:

Allowing the shopping of utility providers and approval of rate discounts to “qualifying or transformational” customers, primarily large energy-using companies such as data centers. Ratepayers would be left to absorb the costs of the discounts while large energy consumers that have higher energy consumption would receive significant cost breaks.

The House bill also would allow the PSC to declare an emergency under public convenience and necessity for like facilities and major utility facilities within certain parameters.

If the PSC declares an emergency, it can waive notice and hearing requirements and alter private facility plans based on environmental impact.

The PSC can authorize clearing, excavation, dredging, and “initial construction” to begin without approval upon receipt of a certificate, if deemed a public convenience and necessity.

Emergency declaration powers would make it almost certain that ratepayers would be responsible for upfront construction costs.

Environmental, private property concerns

Proposed natural-gas pipelines from Savannah to Canadys are expected to run through the massive ACE basin in the Lowcountry, potentially causing large-scale environmental damage to one of our state’s most treasured natural landscapes and wildlife refuges. While the state might need to expand its pipeline infrastructure to meet rising demand, the House bill would accelerate the process by allowing the PSC to bypass standard regulatory reviews, which could put sensitive environmental areas at great risk.

The Port of Charleston could be a viable option to avoid wetland destruction and reliance on another state for energy production.

(We reached out to the South Carolina Port Authority press office for comment on the feasibility of a Charleston-port pipeline but did not receive a response.)

Additionally, the legislation would allow private property to be seized through eminent domain for new pipeline construction.

With economic development language empowering the PSC to bypass normal processes and regulations through an “emergency declaration,” there are essentially no guard rails for immediate clearing, excavation, and initial construction within communities that South Carolinians call home.

Regulatory reviews do need to be streamlined, but emergency powers cannot be used as a tool to bypass private property rights and legitimate environmental concerns.

Senate proposal: ‘fair’ rate hikes?

Update 4/4/2025: The Senate amended version of H.3309 includes practically the entire S.446 proposal.

Meanwhile, the Senate has introduced S.446 with the intention of stabilizing utility rates and providing a framework for the PSC to set rates based on a utility’s revenue. Under the bill, a utility would file with the PSC to “opt-in” for a proposed rate change. Then, any proposed rate changes would require the PSC to review all financial information, including debt expansion and construction costs, and determine an approved rate range.

If signed into law with H.3309, S.446 will set forth a process for rate hikes that the Senate claims are transparent, fair and stable. But there are serious problems with the bill.

Red flags

The Public Service Commission would be given unusual power to lead economic development, which includes the use of emergency powers if deemed a public necessity.

Ratepayers may once again be forced to pay higher rates for energy facility construction costs.

Local communities could be vulnerable to eminent domain.

The ACE basin could be destroyed with drastic repercussions for S.C.’s water table.

S.C.’s energy independence is stifled by reliance on Savannah’s port for transporting fuel, missing an opportunity for South Carolina.

The Public Service Commission’s current mission is to benefit the ratepayer, but the House bill would alter their mission to focus on the state economy at large, potentially neglecting the ratepayer.

Conclusion

If there is to be a joint partnership between Santee Cooper and Dominion to build a massive natural-gas plant, the Legislature should seek a way to ensure that the utilities or other private investors are responsible for upfront construction costs – not the individual ratepayer who is left without other energy options. If those funding sources aren’t available, data centers and the largest energy consumers should finance the upfront costs, given they would be the primary beneficiaries of the proposed plant.

Lawmakers also should consider the strategic advantage of having multiple facilities for energy production, rather than one enormous facility. They should consider adjusting the location of these facilities, which could eliminate the need for intensive pipeline and powerline construction. While it is clear that our current energy consumption trajectory requires increased energy production in the state, meeting that demand should not burden rate-paying citizens and their surrounding communities.

This report may be republished in whole or in part, provided that proper credit is given to the author(s) and the South Carolina Policy Council.