GOOSE CREEK, S.C. – Goose Creek City Council unanimously approved a resolution Tuesday night calling for a referendum to be held on December 3rd regarding the creation of a City of Goose Creek Municipal Electric Utility.
According to a statement provided to The Berkeley Observer, Santee Cooper believes “the proposal is untenable and unlawful.”
“We have previously provided the Mayor, Administrator, and each of you numerous reasons why this proposal is untenable in our view and further requested that tonight’s vote be postponed until we could work together to identify the substantial impediments that exist,” stated Santee Cooper representative, Ray Pinson, during public comment.
According to the City of Goose Creek, the proposed electric utility would have a very limited service area – approximately 5,000 acres north of Old Mt. Holly Road currently owned by Century Aluminum. It would not serve any customers currently served by Berkeley Electric Cooperative, including the residents of Goose Creek.
So if you live in Goose Creek, your electric provider would not change.
What prompted a referendum?
Century Aluminum, which is located just outside the current city limits, is an aluminum smelting company currently employing 300 people. It buys 75% of its power on the open market and the remaining 25% from Santee Cooper, according to city leaders.
City leaders claims that the power it purchases from Santee Cooper is nearly twice as expensive as the portion purchased on the open market on a per-megawatt hour basis.
Aluminum smelting requires massive amounts of electricity and Century Aluminum has informed the City of Goose Creek that this high cost threatens the future of Century Aluminum’s operations. According to Century Aluminum, the company shuttered half of the facility operations in December 2015 due to high power costs.
Based on discussions with Century Aluminum, the city leaders say they have begun investigating options to create a municipal electric utility to serve industrial customers located in areas annexed into the City, including the property currently owned by CA. This property is approximately 5,000 acres, which includes CA’s smelter site and the undeveloped portion of an industrial park owned by CA (the “Annexed Area”).
PRIOR STORIES:
Century Aluminum Workers Protest Outside Santee Cooper
New Agreement Saves 300 Century Aluminum Jobs, Keeps Facility Operating At 50 Percent
Santee Cooper Announces New Deal with Century Aluminum
Is it legal?
City leaders say they have engaged legal counsel to advise on the creation of the new municipal electric utility, and it has further engaged electric utility consultants to advise on the implications of owning and operating a municipal electric utility.
Based on the advice of its consultants, the city, subject to the successful results of a utility referendum voted on by residents of the City, believes that a new municipal electric utility is both legally permissible and financially viable.
Santee Cooper, however, says not so fast. Below is the power company’s full statement:
Santee Cooper was just recently made aware of the electric city resolution scheduled for vote last night. The premise of the proposal, as we understand it, is that the City of Goose Creek would form an electric city in exchange for annexing several acres at Mt. Holly and that they are looking to form this electric city for the purpose of serving one current Santee Cooper customer, Century Aluminum, with off-system power through existing transmission lines and facilities owned by Santee Cooper.
Santee Cooper believes the proposal is untenable and unlawful. Santee Cooper has rights by statute to serve that premises, even after 2020 when the contract with Century expires. South Carolina case law already establishes that, “When an area is incorporated into a new municipality or annexed into an existing one, the municipality may not oust or evict a utility provider which previously has lawfully served the area. South Carolina Electric & Gas Co. v. Town of Awendaw (2004)”. Even if the new electric city can overcome the legal hurdles of supplying power to Century Aluminum, their ultimate power rates may go up because Century Aluminum will have used up a large portion of the finite transmission capacity that Santee Cooper currently uses to create savings for all of our customers – which includes Berkeley Coop customers. – Santee Cooper
Ray Pinson, who manages Local Government and Community Relations activities for Santee Cooper also spoke before council during public comment Tuesday night.
“Becoming an electric utility is not a prospect to be taken lightly,” he stated. “It comes with great liability to your citizens in terms of reporting penalties, regional transmission constraints, lack of your own generation sources, lack of your own transmission facilities, and a host of other legal complications that have been relayed to you already.”
To read Pinson’s full remarks, click here.
What will this proposal cost Goose Creek residents?
Like the city’s water utility, city leaders say the proposed electric utility would operate as an enterprise fund – meaning it would stand alone and not rely on taxpayers.
The costs incurred operating the utility would be built into the rates charged to Century and any other future customers, city leaders state.
Where will the funding come from to build the proposed electric utility?
Any money spent to establish or operate the utility will be recuperated via the sale of electricity – i.e. rolled into the rates we charge our customers.
As a reminder, city leaders stressed that no current residents will be customers, since they are currently served by Berkeley Electric Cooperative, and this utility would not attempt to serve any customer currently served by the Coop.
What’s next?
According to city leaders, the next step in the process is a referendum (public vote) on the matter.
Pending approval by the County Election Commission, the election is anticipated to be held on December 3, 2019.
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