|
Powering economic development
By Dan McCue
Staff Writer
Santee Cooper’s residential customers of electric power grew by record numbers in 2006 and at a rate far surpassing previous years, the state-owned utility announced.
Through Dec. 31, 2006, a total of 7,474 new residential customers were added, bringing the total direct-serve customer count to 156,462 in Berkeley, Dorchester and Horry counties. The highest previous year on record was 1997, when 6,303 new customers were added. The 2006 customer growth rate was 5.02% over 2005.
On one hand, that’s wonderful news, said Laura Varn, Santee Cooper’s vice president of corporate communications and media relations. On the other, it underscored the utility’s biggest challenge: meeting the load growth.
Despite the utility’s best efforts, that’s a challenge that’s not going to become any easier over time.
By the year 2030, according to the U.S. Census Bureau, 40% of the United States’ population is expected to live in the Southeast. As a result, during that same period the demand for electricity is expected to rise by 30% in the region.
In South Carolina alone, the population is expected to grow from its current 4.3 million to 5 million residents by 2025.
“We’re seeing growth in the range of 3 percent to 4 percent a year, significantly higher than the 1.35 percent to 2 percent growth the United States as a whole is experiencing,” said Ron Calcaterra, president and CEO of the Central Electric Power Cooperative, which in partnership with Santee Cooper serves as the conduit for the power provided by the state’s 20 electric distribution cooperatives to more than 665,000 customers in all 46 counties of the state.
The question in the back of some people’s minds—especially in light of the interest of Google and other major energy users in developing facilities in the state—is whether South Carolina’s success in fostering residential and economic development might some day be the reason the lights dim when they flip on the switch.
What will it mean when vacant land across the state that now remains ripe for development evolves into neighborhoods and shopping malls and industry?
And will having enough power when and where it’s wanted come with a price tag that’s way above and beyond the one being paid today?
“The bottom line is there are a lot of people and a lot of businesses coming here,” Varn said. “The question is how you meet the challenge of fulfilling those needs when you not only have an obligation to serve them, but also to do so at a reasonable rate.”
Generation plan revised
To undertake an analysis of the region and state’s power needs of the future, the Charleston Regional Business Journal reached out not only to Santee Cooper, but also to Duke Energy in North Carolina, which has been making inroads in some parts of the state, and also South Carolina Electric and Gas, the principal subsidiary of SCANA Corp., based in Columbia.
Duke Energy did not respond to requests for information. SCE&G declined comment, its economic development team feeling that Google or any other company mulling entry into South Carolina could construe any general comments about luring new businesses to the state as being about them and, therefore, a violation of any confidentiality agreements that might exist with these entities, even if they themselves didn’t mention the business.
However, given its reach across the state, a reach that directly or indirectly touches more than 2 million customers, Santee Cooper is a good illustration of the challenges all utilities face in the state and the efforts that are being undertaken to meet them.
Currently, Varn said, Santee Cooper’s residential customers make up about 20% of its customer base, while industrial users make up about 31% of its customers.
The state’s 20 electrical cooperatives make up the final 50% of the total.
“What we’ve seen across this spectrum of customers is growth and more growth, with no end in sight,” Varn said.
“As much as we’ve grown here in the Lowcountry, we’re seeing similar patterns across the state,” she added.
Santee Cooper’s role in economic development is a natural part of the utility’s mission to be a leading resource for improving the quality of life in the state, Varn said.
The problem for the Santee Coopers of the world is that you can’t build a power plant overnight. As a result, when and how energy resources are deployed must be mapped out in the utility’s “generation plan,” a document Santee Cooper revised most recently in April 2006 due to the growth in the state, drastic changes in oil and gas prices and a renewed interest in nuclear power generation.
To meet the growing demand, Santee Cooper recently put a third 600-megawatt unit on line at its facility in Cross, S.C., one of its biggest power plants. A fourth 600-megawatt unit is already 40% complete and will go on line in January 2009.
Unit 3 cost $675 million to construct, while Unit 4 will cost an estimated $755 million. The total $1.4 billion project is the largest capital expenditure in Santee Cooper’s history.
The utility also spent an additional $135 million on new transmission lines to enhance system reliability.
But the massive expenditure is paying dividends, Varn said. In 2006, the utility had a transmission reliability rate to its residential users of 99.997%.
Its reliability rate to its commercial users was 99.962%, she said.
In addition to its work in Cross, the utility has announced the construction of another 600-megawatt coal-fired station in Florence County, which it intends to have online in 2012.
“That’s a lot of power, but with the growth we’re seeing and projecting, the energy the additional units produce is spoken for as soon as they go on line,” she said.
That situation has inspired Santee Cooper to begin actively exploring the nuclear option, in the form of two reactors that would be built in collaboration with SCE&G on the V.C. Summer Nuclear Station site near Jenkinsville.
The Santee Cooper board of directors recently committed $390 million to the consideration of additional nuclear capacity and the lengthy permitting process, which is already underway.
Currently only about 10% of the power generated in the state is created through nuclear technology, with SCE&G getting two-thirds of the output and one-third going to Santee Cooper.
If the two utilities decide to move ahead with the project, construction on the first reactor would begin in 2016, and on the second in 2019. Once the second reactor went on line, SCE&G would get 55% of its output, while Santee Cooper would get 45%.
Where the rubber meets the road
The success of the S.C. Department of Commerce and groups like the Charleston Regional Development Alliance can make being a utility tough, she said.
“Economic development is where the rubber meets the road,” Varn said. “We’re always working actively to bring in major businesses. The trouble is we can’t use that on the books. When something major comes on line, that’s when we have to rely on past planning and in the meantime we have to make up the potential shortfalls.”
Varn said in those rare instances when peak electricity use taxes the utility’s ability to produce power, Santee Cooper can go to the spot market to purchase coal or it can purchase excess power from other utilities in the Southeast.
As at Santee Cooper, Calcaterra said one of his biggest challenges in meeting the demands of economic and population growth is cost.
“You obviously have to generate more power and the newer generation of equipment to do that is a lot more expensive than the old stuff,” he said. “Economic development brings a lot of wonderful things with it. We’re excited when there’s a new company to serve that’s bringing jobs to a community. On the other hand, you have to build a lot of facilities and that’s getting more and more difficult.
“Money’s one issue, but the other is real estate. Because of the demand for it, land is very dear in South Carolina and it’s becoming more and more difficult to secure the right-of-way for transmission lines.”
The cooperative perspective
Access to affordable and reliable power has been a significant part of the story of economic development in the state.
South Carolina’s cooperative utility system was born in the late-1930s and early-1940s because investor-owned utilities didn’t see profit in serving widely dispersed rural customers. At the time, only 2% of South Carolinians were served by investor-owned utilities, Calcaterra said.
“Even today our density—consumers per mile—is far lower in South Carolina than most investor-owned utilities would abide,” Calcaterra said.
In a cooperative, the utility’s customers are actually its owners. There are currently two generation and transmission cooperatives—Central Electric Power Cooperative and Saluda River Electric Cooperative—and 20 distribution cooperatives that serve roughly 1.5 million in every county in the state.
“We serve roughly 70% of the land area of the state,” Calcaterra said.
CEPC buys roughly 95% of its power from Santee Cooper, with the remainder bought from other utilities.
“We purchase a lot of energy, which we transmit over our own lines and over a contract path. Transmissions likes that are owned by other people,” he said.
Calcaterra said reliance on coal to generate electricity helps keep rates down, but estimated that every additional kilowatt of power used in the state equates to burning another pound of coal.
“That’s why we work so closely with Santee Cooper,” he said. “To take advantage of economies of scale.”
It’s also why CEPC and Santee Cooper both have been promoting energy efficiency so strongly.
Last year, Calcaterra said, the state’s cooperatives distributed 50,000 energy-saving florescent light bulbs to businesses, saving enough energy through their use to power 200 homes.
But Calceterra said he doesn’t stay up nights worrying that the next big economic development announcement will break the circuit, so to speak.
Like Santee Cooper, Calcaterra said CEPC does long-range forecasting and planning for future energy needs. “We do a 20-year forecast and then act on the first 10 years of it,” he explained.
Right now CEPC has a capacity of about 5,000 megawatts, Calcaterra said.
There are probably two or three exceptionally large electricity users in the state that require 100 megawatts. Those companies would be large, heavy operations like smelting plants, paper mills or plants that were extraordinarily reliant on automation, Calceterra said.
“But you’re never going to have 10 of those companies at one time come into the state, and if you did and they started to really press you, you could always buy some more power,” he said.
“That’s why going forward, nuclear is becoming more and more attractive. Yes, there are concerns about nuclear power, but if you manage the system wisely, you minimize the risks while generating much more power at a much lower cost.”
Dan McCue is a staff writer for the Business Journal. E-mail him at dmccue@charlestonbusiness.com.
|
E-Mail This Article
Printer-Friendly Version