Utility Crony Capitalism in South Carolina

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Utility Crony Capitalism: South Carolina maintains its laws granting utilities monopoly rights on the sale of electricity, blocking solar.

Utility crony capitalism in South Carolina

Why solar power rarely shines in SC – From thestate.com

Electric utilities wield large amounts of political control in a lot of states. (I have heard it said that the Southern Company is the fourth branch of state government.) Apparently that is true in South Carolina.

A recent opinion piece in Myrtle Beach Online (Third-party solar sales: Chorus calling for clean energy access) lays out the case:

Wiley Cooper, a retired Methodist minister, has been on a mission to change South Carolina energy law, creating a petition after his church was prevented from entering into a contract for solar energy. Earlier this year, InterTech’s Grant Reeves penned a column in the Post & Courier with the same call to action. Both Cooper and Reeves are seeking the elimination of a decades-old restriction in South Carolina law that effectively prevents churches, businesses, and any other organization from installing solar panels at a reasonable cost. It’s not that the panels themselves are too expensive. It’s that the law restricts a market-based solution for financing clean energy.

Businesses like InterTech, organizations like Mr. Cooper’s church, and investors like myself are not calling for something radical. Instead we’re calling for an update of restrictive utility laws like those that have been made in numerous other states. In many other states, individuals and institutions can enter into third-party solar energy sales agreements, in which the developer of the solar project finances and maintains the panels and then sells excess power back to the grid. This way, organizations can get a low-cost, fixed-price on renewable energy without paying to purchase or maintain their own miniature power plant.

What possible reasons can their be for maintaining a utility monopoly so it does not have to compete with another potential supplier, especially if you espouse an belief in free market capitalism? The only thing I can think of is that you really believe in utility crony capitalism.

According to The State (South Carolina’s Home Page!):

During the past two years, utilities have spoken against a policy that could make solar cheaper for Monson and others, spoken against a bill requiring power companies to use more renewable energy and watched quietly as a bill to increase solar tax credits withered in the state Senate.

Records show that big utilities and the state’s electric cooperatives association have spent $2.2 million lobbying lawmakers in the past 2½ years. (Why solar power rarely shines in SC)

It looks like a spend of almost $1M per year on South Carolina legislators buys a continuation of utility crony capitalism.

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2 comments on “Utility Crony Capitalism in South Carolina

  1. Chuck Rosselle on said:

    This is an issue that exists at different levels of severity throughout the parts of the country that have retained the regulated cost-of-service model, except for the Pacific Northwest. So we’re largely talking about the inter-mountain west and the southeast, except Texas. It is also one that is supported by the traditional power industry trade groups. I don’t think this point of view will change until re-structuring begins to demonstrate the ability to reduce electric bills, given that the regions involved are generally lower cost states. The catalyst is likely to be widespread adoption of residential rooftop PV in the regions of the country that support it. In my opinion that time is closer than many realise. When it happens, utilities are going to be faced either with financial problems caused by stranded cost issues, low growth or absorption as their peers adapt to expanded re-structuring. Southern is probably large enough to adapt, smaller utilities may disappear when their state regulators can no longer shield them from consumers demanding equality with other regions of the country.

    • Doug Short on said:

      Hi Chuck – You’re right! The only thing I am not sure about is that restructuring will be a part of the change. By the time rooftop solar begins to eat into utility profits, there will not be savings available from restructuring, so I don’t see it happening. In the states that have restructured, investors have eaten the losses on generation, not customers. In states without restructuring, they may try to charge customers for loss in value but will be unable to do so because they have price competition at the point of consumption. That is why I think once rooftop solar becomes competitive where there are integrated utilities, it will be a real mess for all involved.