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Saturday, June 22, 2024

Study says South Carolina could save $300M through energy market reform

An impending report to South Carolina’s General Assembly on electricity market reforms likely will have implications for legislators and policymakers in North Carolina, as it urges an attempt to create or join a multi-state grid operator “as quickly as possible.”

The draft report from The Brattle Group stresses that the effort should involve “the Carolinas” — plural — and claims it could save customers in South Carolina alone between $285 million and $362 million a year. North Carolina has about 10.5 million residents, about double the number in South Carolina.

High voltage circuit breaker in a power substation.

South Carolina legislators commissioned the study after passing a bill in 2020 that said they wanted to look at the potential benefits of encouraging more competition in energy markets. That could include joining a “regional transmission organization,” by forcing utilities to divest their power-generation or transmission networks, or via other options.

Duke Energy is the dominant electric and gas utility in both states, though it has a greater market share in North Carolina. It has historically opposed RTOs. A Duke Energy spokesperson did not respond to a request for comment Monday afternoon.

“Given the preliminary and confidential draft nature of the Brattle report, it would be inappropriate to comment outside of the study committee context,” Duke spokesman Ryan Mosier told the Charlotte Business Journal, which also has a report out on the study.

A study panel hired Boston-based Brattle, which started work in March 2022. A “preliminary and confidential draft” dated Feb. 21 is making the rounds among policymakers in the Palmetto state.

The idea of joining a multi-state grid — specifically a regional transmission organization or RTO — is the report’s top recommendation. The consultants advise South Carolina to  pursue an RTO before taking on possibilities like integrated facilities planning or retail-level reforms.

RTOs are wholesalers of electricity for a region and handle the operations of a grid. There are only a few in the U.S., and none in the Southeast.

The Brattle Group report urges South Carolina to join the PJM Interconnection, which  involves 13 Mid-Atlantic states that includes Virginia, Pennsylvania, Ohio and New Jersey.

PJM has been a Brattle Group client. Its territory includes some northeastern North Carolina counties that aren’t served by Duke Energy.

The estimated $300 million in savings from an RTO would come from operational savings accruing when power flows “more freely across multiple utilities in the larger geographic region,” the consultants said, and from investment-cost savings stemming from a reduction in “the total amount of necessary generation” projects.

State Rep. Larry Strickland, R-Johnston, led a push in 2021 for North Carolina to follow South Carolina’s example and do its own study of electricity market reforms. But it stalled in the N.C. House after encouraging fierce opposition from Duke Energy. No similar study is underway in North Carolina.

Instead, legislators passed the Energy Solutions for North Carolina act, which established reduction targets for carbon emissions and allowed regulators and Duke to use multi-year rate plans.

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