S3E13: Brattle Group consultants discuss their report for the South Carolina legislature on the benefits of adopting an organized regional wholesale power market in the Southeast

Burned by an aborted nuclear power plant new build that saddled the state's consumers with hundreds of millions of dollars in needless costs for years to come, South Carolina's Act 187 established a legislative study committee to ponder whether the state's electricity consumers might not be better off with competitive reforms of the Palmetto State's 150-year-old monopoly regulatory regime. A centerpiece of the committee's considerations is a sweeping analysis of the competitive options the state could pursue, comprehensively put together by the Brattle Group. 

We talk with two of the report's authors – John Tsoukalis, principal, and Andrew Levitt, senior consultant, at the Brattle Group – about their report with the top-line conclusion that South Carolina electricity consumers could save up to $300 million annually if the state's utilities participated in some form of large regional transmission pooling organization. The biggest cost savings, they determined, among the various scenarios considered in the report, were projected from a scenario envisioning if the entire Southeast region, not just South Carolina, were to throw in with PJM Interconnection, the large regional transmission operator encompassing from Illinois across to Pennsylvania, New Jersey, Maryland (PJM) and Virginia, in order to create a large, diverse wholesale power marketplace that helps minimize the considerable costs of meeting resource needs and operating a reliable powergrid.

As directed by Act 187, the Brattle analysis also examined the potential consumer savings available from conducting a consolidated statewide integrated resource planning (IRP) process, rather than the less efficient utility-by-utility IRP planning that the state's utilities undertake with regulators to determine development or acquisition of new generation resources to meet reliability needs – and then performing competitive solicitations to help develop any new resources.

Also as required by the law compelling Brattle's analysis, the report delved into the Third Rail of electricity politics: restructuring utility regulatory oversight to provide some form of competition in retail sales to consumers, whether residential or the large industrial and commercial customers. "Part of what I guess people don't really understand is, you can't really do retail choice unless you have competitive wholesale markets that are working already," Tsoukalis explains, calling the potentially near-term savings from grid regionalization the "low-hanging fruit" of the options available to lawmakers to consider going forward.

"There's so many options" in the report for lawmakers to consider, Levitt notes. "You can take a mix-and-match approach, different ways through governance, different ways to do transmission planning. You can share these things and not share those things. I'm 100% confident that there's a solution out there that will match the political will that's present at the moment. I don't myself know what the solution will be, but we're available to help craft it."

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