Santee Cooper, cooperatives squabble over data center power bill and whose customers should pay

South Carolina’s state-owned utility company and the electric cooperatives it serves are feuding over the power bill for a long-time Google data center in the Lowcountry.

At stake in the business dispute is between $16 million and $24 million annually, according to lawyers for the two utility groups.

The cooperatives say that’s a savings that could be divided out among all of their roughly 2 million customers statewide to reduce their power bills. Santee Cooper argues it’s a cost that could increase the power bill of their 200,000 direct customers, located in Berkeley, Georgetown and Horry counties.

The question is over which group of customers pays, who saves and how the state-owned utility’s financials are impacted.

“This $16 million or $44 million over a couple of years is a big issue because it matters to the people at the end of the line,” said Central Electric Power Cooperative CEO Rob Hochstetler, whose organization negotiates rates and supplies power on behalf of cooperatives statewide.

The disagreement, discussed at a joint meeting held Friday in West Columbia, came about as cooperatives had sought to use a provision in the long-term contract it holds with Santee Cooper that gives the cooperatives the option to buy power for a lower rate for large industrial users — in this case a Google data center in Berkeley County that has been in operation since 2007.

Google announces $3.3B investment in SC data centers, 200 new jobs

But Santee Cooper says the size of that data center — which uses upwards of 380 megawatts of power — is too large and the rate reduction will cost the power company too much money, creating a “grossly unfair and unjust burden” to Santee Cooper and its customers. By comparison, all of Santee Cooper’s current industrial customers use about 379 megawatts in total, attorney Carmen Thomas said.

Instead, Santee Cooper wants the cooperatives to renegotiate new terms rather than using those included in the existing contract.

“What that really amounts to is saying, ‘You guys need to take something less than your contract entitles you to,’ ” said Alex Hall, the attorney for the cooperatives. “Not liking the implications of a counterparty exercising his contractual rights is not a valid reason for refusal. That’s not how contracts work.”

While the data center may use a lot of power, it had already paid the cost of the power lines it required. Plus, the $16 million to $24 million in question only amounts to about 1% of Santee Cooper’s $1.9 billion in total operating revenue.

Besides, Santee Cooper and cooperatives already reached an agreement on the matter back in January. Santee Cooper had already agreed, Hall said.

The cooperatives held off on signing as the two groups continued to negotiate other matters related to charges racked up during a court-mandated Santee Cooper rate freeze that recently expired. But had they not waited, Berl Davis Jr. of Palmetto Electric Cooperative said, the issue would not have been up for argument now.

Thomas said Santee Cooper considered those previous documents to be draft agreements, not final.

She also argued the cooperatives’ right to a reduced rate “is not unilateral,” saying the provisions for this particular type of rate allow Santee Cooper to negotiate when it comes to “large and unusual loads.”

“That right does not exist in a vacuum,” she said.

Hochstetler and Santee Cooper President Jimmy Stanton closed the meeting with mutual vows to resolve the contract dispute in the coming months.

SC’s state-owned utility enacts higher rates for data centers, large users

While the Berkeley County data center has been around for nearly two decades, such centers have dominated the conversation around energy needs in South Carolina as the state has grappled with how to meet the power demand of a growing population and manufacturing based, in addition to the new centers being built by tech giants such as Google, Meta and Blox.

Santee Cooper’s governing board, last month, even enacted a new rate meant to ensure energy-intensive data centers, built to serve the country’s ever-growing technology needs, are covering the cost of generating the massive amount of power they require.

The “experimental” rate will be in place for the next four years, testing it out before considering whether to make the policy permanent.

But that rate for new customers doesn’t apply to the 18-year-old Google data center.

Under Santee Cooper’s new rate, large users will be charged at a rate similar to Santee Cooper’s existing industrial users. The difference is those customers must sign a 15-year contract, one they can’t get out of without paying a set minimum. The utility also will charge more for power used at times of day when demand for energy is at its highest.