Rising costs

If you have seen the news lately, you know there is an epidemic of inflation and surging costs going around. I wish I could tell you that the price of electricity has somehow remained immune. Unfortunately, that’s not the case, mostly due to factors beyond our control. Despite our best efforts, the co-op is still affected by the economic realities and challenges we’ve faced in recent years. 

INFLATION Inflation isn’t just driving up the price of essentials like groceries and gas. Costs have risen for everything, and as I said at the Annual Meeting, so is our cost of doing business. Material costs have soared in recent years, and many of the products that we use have doubled in price since 2019.

V.C. SUMMER AND THE COOK CASE A few years ago, two South Carolina utilities tried and failed to expand the V.C. Summer nuclear power plant. South Carolina’s electric co-ops buy the bulk of our power from one of those utilities, Santee Cooper, and must share in the costs of their capital projects, successful or not. In the wake of that project’s cancellation, Santee Cooper settled the “Cook” class-action lawsuit and agreed to a four-year rate freeze that kept our power costs stable. Since then, a series of unfortunate events—including major storms, a fire at a supplier’s coal mine and global events have increased expenses for Santee Cooper.

Those new expenses will get passed down to their consumers—including our co-op—after the rate freeze ends on Dec. 31. We expect our cost of purchasing wholesale power will rise significantly when Santee Cooper’s court-imposed four-year rate freeze ends in December. We don’t yet know exactly how much, but we do know the state-owned utility wants to charge co-op members for their share of an estimated $744 million in unforeseen costs, called the “Cook Settlement Exceptions,” it incurred over the past five years. All parties involved are negotiating the final amount and the ability to spread those payments over a longer time, which would soften their impact on power bills.

ENERGY POLICY Recently, the federal government has pushed hard to reduce carbon emissions, requiring power providers to adopt unproven, unavailable, and expensive technologies. They may have good intentions, (846) but those regulations will make the cost of producing power—and buying it—go up. When it comes to energy policy, we work diligently with our state legislators and congressional representatives to make sure our voices are heard.

WHAT WE’RE DOING ABOUT IT We strive to reduce expenses whenever we can. We review rate studies and forecasts that help us make decisions to provide safe and reliable power into the future. We continue to offer assistance and innovative programs to help our members save on their energy bills. I think it’s important for members to be aware of the challenges the co-op is facing, and most importantly, how we plan to respond. In the coming months, I plan to revisit these factors in more detail. 

Palmetto Electric’s not-for-profit model means keeping the cost of electricity down is a top priority. We are exploring every possible avenue to soften the impact of rising energy costs on our members. There are many important questions still to be answered, but you have my promise that we will be transparent and proactive as we work to keep our members' power affordable.

A. Berl Davis Jr.

President and CEO