Newly enacted legislation, which passed the General Assembly with strong bipartisan support and was quickly signed into law by Gov. Henry McMaster, could save South Carolina electric customers millions of dollars in costs to restore service after recent historic as well as future weather events.
The legislation — known as Senate Bill 1077 — gives the Public Service Commission of South Carolina the authority to approve securitization of storm costs if a proposed plan submitted by a utility would result in lower overall costs for customers.
“Ensuring reliability and rapid recovery following natural disasters for families across our state in the most cost-effective manner is a critical priority,” said Senate President Thomas Alexander, a lead sponsor of the legislation. “We are grateful for the broad collaboration that made this possible to protect our families and ratepayers.”
In recent years, South Carolina households and businesses have endured a number of record-breaking storms, floods and associated severe weather-related outages. Within a four-month span in 2018 alone, the Palmetto State endured three massive storms that destroyed homes and businesses. Significant devastation resulted in hundreds of millions in costs incurred by utility companies in the state, including Duke Energy. These unprecedented costs include completely rebuilding the power grid in some locations.
Under a securitization plan, bonds are issued in the financial markets at lower interest rates and the proceeds are used to pay for the extraordinary storm-related expenses incurred. These expenses can include everything from planning and staging for the storms, the work of line technicians, damage assessors and contractors to the reconstruction, replacement and repair of electric generation, transmission or distribution equipment and facilities.
Coastal states such as Texas, Louisiana, Florida and most recently North Carolina, have all enacted similar legislation for the benefit of utility customers. This financing tool can substantially lower costs for customers compared with traditional storm recovery methods.
“Duke Energy and other organizations supported this legislation — a prudent, proactive, cost-effective response to significant storm costs,” said Mike Callahan, Duke Energy’s South Carolina state president. “I want to both thank and congratulate all involved in this effort to deliver true savings to our most important stakeholder of all — our South Carolina customers.”