Santee Cooper’s board has approved a plan to retire coal-fired generation, add solar and energy storage while reducing the public power utility’s debt and partnering with other utilities to lower costs.
The plan, called a business forecast, signals a change in direction for Santee Cooper, which is owned by the state of South Carolina.
“We have heard the strong call for improvement and transparency, and today our Board approved a new business forecast that substantially moves Santee Cooper in a new direction,” Dan Ray, chairman of Santee Cooper’s board, said Sept. 9. “This forecast will increase benefits to customers, and decrease their costs.”
“This is a comprehensive, forward-focused roadmap grounded in some of the best strategies used by progressive utilities around the country,” said President and CEO Mark Bonsall. “These are proven technologies and practices through which Santee Cooper can better serve its customers for decades to come. The phasing out of coal over several years helps us make this transition, and it our goal to do so without layoffs.”
The release of the plan is part of a process laid out in H. 4287, a resolution that requires the state to explore selling Santee Cooper, hiring a third party to manage Santee Cooper or reform it.
The resolution was triggered by the July 2017 decision by Santee Cooper and South Carolina Electric & Gas Co. to stop building two nuclear reactors at the V.C. Summer plant in South Carolina, largely driven by increases in the project's estimated cost.
The plan represents a base case that the South Carolina Department of Administration will use to judge offers for Santee Cooper. Santee Cooper intends to submit its reform plan later this year.
The plan calls for cutting Santee Cooper’s coal-fired capacity by 40 percent by retiring two units totaling 580 megawatts at the Winyah power plant in 2023, with the remaining two units totaling 570 MW shutting down in 2027.
In part, Santee Cooper intends to replace the power plant and ensure short-term reliability with 100 MW of dual-fuel aeroderivative turbines by 2023. It expects to need 500 MW of natural gas-fired combined cycle generation in 2027 and another 500 MW in the early 2030s. Santee Cooper plans to talk with other utilities about jointly building a new gas-fired plant.
“Participating with others in the development of future NGCC resources should allow Santee Cooper to better match the total capacity of its power supply portfolio with the capacity required to reliably meet winter and summer peak demands of its wholesale and retail customers,” the utility said in its business forecast.
Santee Cooper also plans to contract for 1,000 MW of renewables, with most expected to come from solar, by 2024. The utility intends to issue a request for proposals from solar developers later this year.
Introducing large-scale battery storage to South Carolina, it intends to add 200 MW of energy storage by 2028, partly to help manage early evening peak demand in the summer. The storage may be added alongside solar resources.
Santee Cooper plans to ramp up demand-side management programs to meet 150 MW of winter peak load in 2027 and 200 MW a decade later.
Santee Cooper will continue to evaluate the possible retirement of its 2,370-MW coal-fired Cross power plant, which could make sense if there is a modest tax on carbon dioxide emissions.
The change in Santee Cooper’s resource mix is expected to save $90 million to $120 million a year from 2023 through 2027 and about $170 million annually from 2028 through 2040.
Under the plan, Santee Cooper’s coal-fired capacity falls to 30 percent of its total capacity by 2033, down from 52 percent now. In the same period, its renewable capacity will jump to 14 percent from 5 percent and its natural gas generation, including market purchases, will climb to 46 percent from 33 percent.
Santee Cooper plans to speed up the roll out of smart meter technology. “This effort will be the focal point of a new emphasis on innovation in convenience, conservation, choice and information to our customers,” the utility said.
Santee Cooper expects its resource plan will evolve as circumstances change.
Santee Cooper intends to work with other utilities on mutually beneficial projects. “Santee Cooper will seek opportunities to work with other utilities to explore various alternatives for mutual benefit to our customers, ranging from coordination of system dispatch, developing new generation, more favorable natural gas supply, capacity and energy transactions, and other efforts to reduce operational costs,” the public power utility said.
Santee Cooper’s plan calls for holding its base retail rates flat until 2025, with the last rate hike coming in 2017.
Santee Cooper said it intends to commit about $925 million to nuclear debt payoff in the near term, with $350 million coming from currently available internal funds, an additional $150 million in internal funds in 2020 and $425 million from the sale of the V.C. Summer Units 2 and 3 equipment over the next two years.