Families and businesses served by South Carolina’s electric cooperatives can rest assured that data centers will pay their own way for energy thanks to a recently formalized rate structure.
For years now, the state’s 19 co-ops have included terms in individual contracts to make sure data centers cover the full costs of any electric infrastructure and power plants needed to serve them. Going forward, a formal rate schedule adopted by the co-ops guarantees those protections will be included in every contract for these large power users.
The new framework includes gold-standard protections for existing co-op members. Those protections are reflected in the power supply contracts for the handful of data centers that co-ops will soon serve across South Carolina.
The new policy was unanimously approved by the board of Central Electric Power Cooperative, an organization headquartered in Columbia that purchases electricity in bulk on behalf of the state’s distribution co-ops.
“All of our ratemaking decisions are about fairness,” says Berl Davis, CEO of Palmetto Electric Cooperative and chairman of Central’s board. “South Carolina families and businesses should not and will not subsidize the energy costs of major corporations. We have always recognized that and ensured our rates were consistent with that ideal. This rate reinforces that approach.”
The new standards are locked in as large technology companies continue to eye sites in South Carolina for potential development. Data centers are energy-intensive facilities filled with servers that provide computing power for the internet and artificial intelligence.
Co-ops currently serve one South Carolina data center, which began operations in 2007. Three others are under development in co-op territories in different parts of the state. More could be on the way as the global race for cyber dominance continues.
Central’s new rate structure keeps co-ops ready for that future. It applies to large energy users that have peak needs similar to about 3,000 homes.
The policy includes the following protections, all of which have been endorsed by third-party advocates as pro-consumer. Data centers must:
- Sign contracts of at least 15 years with early termination penalties.
- Prepay for necessary electric infrastructure upgrades.
- Lower electricity use during potential energy shortages.
- Provide upfront cash deposits, along with other financial security requirements.
- Meet monthly energy demand minimums, ensuring sufficient revenues are generated to protect other consumers.
With these protections in place, co-ops are minimizing the risks and costs associated with serving data centers while maximizing the potential benefits. The significant and steady energy demands of large industrial users of electricity enable co-ops to buy and sell power with greater efficiency. This means users like data centers can help co-ops pay off fixed costs—such as poles, wire and substation equipment—that contribute to other members’ power bills.
“Large energy users bring challenges, but they also can bring significant benefits to the power grid, creating efficiencies and paying for system costs that otherwise would have been borne by South Carolina co-op members,” says Central CEO Rob Hochstetler. The new policy “keeps South Carolina open for business while protecting our residential and commercial members as we make needed investments in the reliability of our grid.”