SC can prevent data centers from increasing power bills

As a former regulator on the South Carolina Public Service Commission, I’ve kept up with national trends that could impact our state and your bank account.

Guess I’m still in the habit.

Here’s a national trend that has the potential to dramatically increase electric utility bills for all classes of ratepayers: new data centers.

State lawmakers around the United States have long sought to attract new industries with generous tax breaks and financial incentives.

But research analysts with Good Jobs First, a policy group that tracks government subsidies, have said these data centers don’t bring in enough tax revenues to cover their tax breaks. The alarm bells are ringing.

We need to stop recruiting new data centers.

Good Jobs First concluded that new data centers are “not a winning program for state budgets.”

Legislators in other states have discovered the increasing risks that data centers bring with them.

Data centers often require upgrades to the state electricity grid. These added costs for new transformers, substations and distribution lines will have to be paid for by all ratepayers through increased utility bills.

New Jersey state Rep. Bob Smith, a Democrat, said “we have a crisis coming our way in electric rates. These outrageous increases are going to be put on our citizens.”

Data centers typically run nonstop. They need much more electric power compared to manufacturing plants.

In Oregon, state Democratic Rep. Pam Marsh said “there’s lots of evidence that the demand of those data centers has already been shifted onto residential ratepayers.”

Marsh sponsored a bill that would require data centers to be assigned to a separate rate class that accounts for their added costs.

Utah just passed a new law that allows large load customers like data centers to craft separate contracts with utilities as a way to insulate residential customers from increasing electricity bills.

Tyson Slocum is the energy program director for Public Citizen, a consumer advocate nonprofit. He observed that “the normal model is you spread that investment costs across all customers. That’s not reasonable here.”

Gary Wood, CEO with Central Virginia Electric Cooperative has more than 30 years of experience in electrical engineering. Wood says that rolling blackouts are very likely in his region in the next few years. He’s concerned about growing electricity loads that these data centers are bringing with them.

A December study commissioned by Virginia legislators found that power demand in the state could double in a decade and increase by up to 183% by 2040.”

Virginia’s Joint Legislative Audit and Review Commission recently found that consumption could reach more than 30,000 gigawatt hours per month due to new data centers.

Just one gigawatt is a billion watts. To put that in perspective, that’s equal to nearly 2 million solar panels.

The Virginia commission found that new solar facilities, wind generation, new gas plants and transmission facilities will all be needed to meet “unconstrained demand,” which will be “very difficult to achieve.”

The Federal Energy Regulatory Commission (FERC) has taken steps to reduce the impact of increasing demand for electricity.

FERC recently approved a request to keep some older power plants running past their expected retirement. The commission also recommended pairing renewable sources like solar with battery storage with natural gas plants.

While this strategy will help, it still won’t meet the challenges created by increasing demand.

Here are my suggestions for South Carolina lawmakers and utilities to consider:

1. Eliminate all financial incentives and tax breaks to new data centers who want to locate in South Carolina.

2. Encourage data centers already here to improve their energy efficiency with newer more efficient computer chips while implementing energy management standards.

3. Require Duke, Dominion and Santee Cooper to create demand response programs for any utility customers who use 25 megawatts or more per year. This would reduce their financial impact on other ratepayers. It would also reduce the impact of future rolling blackouts.

4. Allow South Carolina electric cooperatives to create their own for-profit subsidiaries to provide electricity through retail sales to their customers with load capacity exceeding 90 megawatts.

5. Require electric utilities to install advanced conductors which use aluminum cores instead of steel cores in all new transmission lines. This change would increase transmission capacity by 50%.

These changes can enable South Carolina to meet the increasing demand for electric power.