Fuel costs likely to drive up South Carolina electric bills
Electric bills are likely to increase next year for South Carolina customers served by Dominion Energy or two units of Duke Energy.
The Post and Courier of Charleston reports the increases are likely to come after state regulators review how much the power companies have spent on coal and natural gas in 2021. South Carolina power providers estimate fuel costs annually, and then settle up differences between the estimate and what they actually paid. Fuel costs are passed through to customers on a dollar-for-dollar basis.
If utilities collect too much, they issue refunds, but if they have collected too little, rates go up. This year, utilities have probably billed customers too little for fuel.
The economic recovery from the COVID-19 pandemic has driven up demand for natural gas and prices have nearly doubled from March to November, rising to about $5.50 per million British thermal units — the standard industry measurement.
Coal prices also are surging.
Jim Chapman, executive vice president and chief financial officer for Dominion Energy, addressed the jump in natural gas costs during the company’s most recent earnings call, noting that “we’re hearing a lot about this topic across the industry this quarter.”
“So across our electric and gas utilities, we have very clear-cut ‘pass-through mechanisms’ for fuel costs,” Chapman told investors on Nov. 5, referring to the annual adjustments. “So this is less of an issue as to how the recent price increases may impact earnings if they’re sustained, but rather how they’ll impact our customer bills, something we obviously care about and we watch very closely.”
He also predicted the impact “to be less pronounced than what some recent headlines suggest due to a few things: the proximity of gas resources, our widespread use of storage to offset peak day requirements and the effectiveness of our gas supply hedging strategies.”
Dominion notified its 758,000 electric ratepayers in 24 counties this month that the South Carolina Public Service Commission will review its fuel bill in April.
Customers in the Pee Dee region served by Duke Energy Progress could see the adjustments appear on their July bills, after an April meeting with regulators. The commission will review fuel costs for Duke Energy Carolinas in July.
“Fuel consumption and costs are subject to a variety of factors including weather, customer demand and commodity prices,” said Ryan Mosier, spokesperson for Charlotte-based Duke Energy.
Customers of state-owned utility Santee Cooper won’t have to worry about the issue for at least the next three years.
“We’re in a court-ordered rate lock period through 2024, so fuel increases will not be passed on to customers,” said Mollie Gore, director of communications.
The freeze is part of a 2020 lawsuit settlement stemming from the Moncks Corner-based utility’s role in the failed expansion of the V.C. Summer Nuclear Station.