The board of South Carolina’s largest power producer, Santee Cooper, on Monday voted to suspend construction of the proposed $2.2 billion Pee Dee Energy Campus—a 600-MW coal-fired power plant— in Florence County, S.C.. The state-owned utility cited the recession, lowered power demand, and proposed federal government regulations as primary reasons for its decision.
“We are witnessing three significant changes,” Santee Cooper’s chairman, O.L. Thompson, said in a statement Monday. “The current recession has reduced overall demand for electricity, proposed federal government regulations would significantly increase the operating costs of coal-fired power plants and Central Electric Power Cooperative, our largest customer, intends to gradually reduce its power load from Santee Cooper by approximately 1,000 megawatts beginning in 2013.”
The ongoing recession had caused a 5% drop in Santee Cooper’s power sales from last year, the utility’s president and CEO, Lonnie Carter, explained. “In particular, the recession’s impact on our industrial customers has been significant. In addition, we anticipate that as the economy recovers from this economic downturn, long-term power needs will be lower,” he said.
The utility also expects that proposed federal government regulations—specifically the cap and trade legislation that recently passed in the House—could have tremendous cost implications for its customers. “The bill calls for carbon capture and sequestration technology to be placed on new plants by 2025, and there currently exists no technology to do that. The cost of the technology and the carbon tax are unknown and expected to be high, and this uncertainty causes great concern for Santee Cooper in considering future coal plants,” Carter said.
Carter also elaborated on the load reduction by Central Electric Power Cooperative, which reportedly intends to acquire power from North Carolina’s Duke Energy instead. The cooperative is expected to begin reducing its load with Santee Cooper over a seven-year period beginning in 2013, the utility said. By 2019, this would amount to approximately 1,000 MW.
Central Electric distributes Santee Cooper power to all 20 electric cooperatives in all 46 counties of the state. The megawatt reduction would be equal to power requirements of the five upstate cooperatives. The cooperative will elect to make the switch from Santee Cooper to Duke Energy by Aug. 31, ending a relationship almost 30 years old, according to the Charleston Post and Courier.
The transfer was logical because costs of new plant equipment would have added up if the cooperative stayed with Santee Cooper, Michael Couick, chief executive of Central’s umbrella organization, Electric Cooperatives of South Carolina, told the newspaper. Couick also reportedly said that the cooperative had considered that Santee Cooper relies more heavily on fossil fuels than Duke Energy. "If you look at Congress regulating carbon emissions specifically, it would be more affordable in the long run," the newspaper quoted him as saying.
Voting unanimously to shelve—but not cancel—the project, the utility’s 11-member board on Monday also directed Carter to “to further evaluate the rapid changes in the industry and how it may impact the utility’s future generation plan and report back to the board at a later date.”
The Pee Dee Energy Campus received an air permit by the South Carolina Department of Health and Environmental Control and has been moving forward with the federal permits necessary from the U.S. Army Corps of Engineers. According to the utility, the campus had been widely supported by local and state elected officials, business and civic leaders, and people from throughout the Pee Dee community.
“The situation has changed rapidly over the past year and we now need to review the need for additional power generation given the changes that have occurred. Santee Cooper must make sure power is available when needed, and also affordable,” Carter said.
Utility Chair Thompson added optimistically that Santee Cooper customers would benefit from the decision because they would not have to bear the capital costs of constructing the proposed Pee Dee facility.
Sources: Santee Cooper, Charleston Post and Courier