§ 58-41-20 — Review and approval proceedings for electrical utilities' avoided cost methodologies, standard offers, form contracts, and commitment to sell forms.

South Carolina § 58-41-20

• Jurisdiction: South Carolina
• Title 58: PUBLIC UTILITIES, SERVICES AND CARRIERS
• Ch. 41: RENEWABLE ENERGY PROGRAMS

Text

(A) As soon as is practicable after the effective date of this chapter, the commission shall open a docket for the purpose of establishing each electrical utility's standard offer, avoided cost methodologies, form contract power purchase agreements, commitment to sell forms, and any other terms or conditions necessary to implement this section. Within six months after the effective date of this chapter, and at least once every twenty-four months thereafter, the commission shall approve each electrical utility's standard offer, avoided cost methodologies, form contract power purchase agreements, commitment to sell forms, and any other terms or conditions necessary to implement this section. Within such proceeding the commission shall approve one or more standard form power purchase agreements for use for qualifying small power production facilities not eligible for the standard offer. Such power purchase agreements shall contain provisions, including, but not limited to, provisions for force majeure, indemnification, choice of venue, and confidentiality provisions and other such terms, but shall not be determinative of price or length of the power purchase agreement. The commission may approve multiple form power purchase agreements to accommodate various generation technologies and other project-specific characteristics. This provision shall not restrict the right of parties to enter into power purchase agreements with terms that differ from the commission-approved form(s). Any decisions by the commission shall be just and reasonable to the ratepayers of the electrical utility, in the public interest, consistent with PURPA and the Federal Energy Regulatory Commission's implementing regulations and orders, and nondiscriminatory to small power producers, and shall strive to reduce the risk placed on the using and consuming public. (1) Proceedings conducted pursuant to this section shall be separate from the electrical utilities' annual fuel cost proceedings conducted pursuant to Section 58-27-865. (2) Proceedings shall include an opportunity for intervention, discovery, filed comments or testimony, and an evidentiary hearing. (B) In implementing this chapter, the commission shall treat small power producers on a fair and equal footing with electrical utility-owned resources by ensuring that: (1) rates for the purchase of energy and capacity fully and accurately reflect the electrical utility's avoided costs; (2) power purchase agreements, including terms and conditions, are commercially reasonable and consistent with regulations and orders promulgated by the Federal Energy Regulatory Commission implementing PURPA; and (3) each electrical utility's avoided cost methodology fairly accounts for costs avoided by the electrical utility or incurred by the electrical utility, including, but not limited to, energy, capacity, and ancillary services provided by or consumed by small power producers including those utilizing energy storage equipment. Avoided cost methodologies approved by the commission may account for differences in costs avoided based on the geographic location and resource type of a small power producer's qualifying small power production facility. (C) The avoided cost rates offered by an electrical utility to a small power producer not eligible for the standard offer must be calculated based on the avoided cost methodology most recently approved by the commission. In the event that a small power producer and an electrical utility are unable to mutually agree on an avoided cost rate, the small power producer shall have the right to have any disputed issues resolved by the commission in a formal complaint proceeding. The commission may require mediation prior to a formal complaint proceeding. (D) A small power producer shall have the right to sell the output of its facility to the electrical utility at the avoided cost rates and pursuant to the power purchase agreement then in effect by delivering an executed notice of commitment to sell form to the electrical utility. The commission shall approve a standard notice of commitment to sell form to be used for this purpose that provides the small power producer a reasonable period of time from its submittal of the form to execute a power purchase agreement. In no event, however, shall the small power producer, as a condition of preserving the pricing and terms and conditions established by its submittal of an executed commitment to sell form to the electrical utility, be required to execute a power purchase agreement prior to receipt of a final interconnection agreement from the electrical utility. (E)(1) Electrical utilities shall file with the commission power purchase agreements entered into pursuant to PURPA, resulting from voluntary negotiation of contracts between an electrical utility and a small power producer not eligible for the standard offer. (2) The commission is authorized to open a generic docket for the purposes of creating programs for the competitive procurement of energy and capacity from renewable energy facilities by an electrical utility within the utility's balancing authority area if the commission determines such action to be in the public interest. (3) In establishing standard offer and form contract power purchase agreements, the commission shall consider whether such power purchase agreements should prohibit any of the following: (a) termination of the power purchase agreement, collection of damages from small power producers, or commencement of the term of a power purchase agreement prior to commercial operation, if delays in achieving commercial operation of the small power producer's facility are due to the electrical utility's interconnection delays; or (b) the electrical utility reducing the price paid to the small power producer based on costs incurred by the electrical utility to respond to the intermittent nature of electrical generation by the small power producer. (F)(1) Electrical utilities, subject to approval of the commission, shall offer to enter into fixed price power purchase agreements with small power producers for the purchase of energy and capacity at avoided cost, with commercially reasonable terms and a duration of ten years. The commission may also approve commercially reasonable fixed price power purchase agreements with a duration longer than ten years, which must contain additional terms, conditions, and/or rate structures as proposed by intervening parties and approved by the commission, including, but not limited to, a reduction in the contract price relative to the ten-year avoided cost. Notwithstanding any other language to the contrary, the commission will make such a determination in proceedings conducted pursuant to subsection (A). The avoided cost rates applicable to fixed price power purchase agreements entered into pursuant to this item shall be based on the avoided cost rates and methodologies as determined by the commission pursuant to this section. The terms of this subsection apply only to those small power producers whose qualifying small power production facilities have active interconnection requests on file with the electrical utility prior to the effective date of this act. The commission may determine any other necessary terms and conditions deemed to be in the best interest of the ratepayers. This item is not intended, and shall not be construed, to abrogate small power producers' rights under PURPA that existed prior to the effective date of the act. (2) Once an electrical utility has executed interconnection agreements and power purchase agreements with qualifying small power production facilities located in South Carolina with an aggregate nameplate capacity equal to twenty percent of the previous five-year average of the electrical utility's South Carolina retail peak load, that electrical utility shall offer to enter into fixed price power purchase agreements with small power producers for the purchase of energy and capacity at avoided cost, with the terms, conditions, rates, and terms of length for contracts as determined by the commission in a separate docket or in a proceeding conducted pursuant to subsection (A). The commission is expressly directed to consider the potential benefits of terms with a longer duration to promote the state's policy of encouraging renewable energy. (G) Nothing in this section prohibits the commission from adopting various avoided cost methodologies or amending those methodologies in the public interest. (H) Unless otherwise agreed to between the electrical utility and the small power producer, a power purchase agreement entered into pursuant to PURPA may not allow curtailment of qualifying facilities in any manner that is inconsistent with PURPA or implementing regulations and orders promulgated by the Federal Energy Regulatory Commission. (I) The commission is authorized to employ, through contract or otherwise, third-party consultants and experts in carrying out its duties under this section including, but not limited to, evaluating avoided cost rates, methodologies, terms, calculations, and conditions under this section. The commission is exempt from complying with the State Procurement Code in the selection and hiring of a third-party consultant or expert authorized by this subsection. The commission shall engage, for each utility, a qualified independent third party to submit a report that includes the third party's independently derived conclusions as to that third party's opinion of each utility's calculation of avoided costs for purposes of proceedings conducted pursuant to this section. The qualified independent third party is subject to the same ex parte prohibitions contained in Chapter 3, Title 58 as all other parties. The qualified independent third party shall submit all requests for documents and information necessary to their analysis under the authority of the commission and the commission shall have full authority to compel response to the requests. The qualified independent third party's duty will be to the commission. Any conclusions based on the evidence in the record and included in the report are intended to be used by the commission along with all other evidence submitted during the proceeding to inform its ultimate decision setting the avoided costs for each electrical utility. The utilities may require confidentiality agreements with the independent third party that do not impede the third-party analysis. The utilities shall be responsive in providing all documents, information, and items necessary for the completion of the report. The independent third party shall also include in the report a statement assessing the level of cooperation received from the utility during the development of the report and whether there were any material information requests that were not adequately fulfilled by the electrical utility. Any party to this proceeding shall be able to review the report including the confidential portions of the report upon entering into an appropriate confidentiality agreement. The commission and the Office of Regulatory Staff may not hire the same third-party consultant or expert in the same proceeding or to address the same or similar issues in different proceedings. (J) Each electrical utility's avoided cost filing must be reasonably transparent so that underlying assumptions, data, and results can be independently reviewed and verified by the parties and the commission. The commission may approve any confidentiality protections necessary to allow for independent review and verification of the avoided cost filing.

Legislative History

HISTORY: 2019 Act No. 62 (H.3659), SECTION 1, eff May 16, 2019; 2025 Act No. 41 (H.3309), SECTION 17, eff May 12, 2025. Editor's Note 2025 Act No. 41, SECTION 1, provides as follows: "SECTION 1. This act may be cited as the 'South Carolina Energy Security Act.' " 2025 Act No. 41, SECTION 33, provides as follows: "SECTION 33. (A) To foster economic development and future jobs in this State resulting from the supply chains associated with the same while supporting the significant and growing energy and capacity needs of the State, enhance grid resiliency, and maintain reliability, the General Assembly finds that the State of South Carolina should take steps necessary to encourage the development of a diverse mix of long-lead, clean generation resources that may include nuclear and advanced nuclear, biomass as defined in Section 12-63-20(B)(2) of the S.C. Code, hydrogen-capable resources, fusion energy, and other technologies, and should preserve the option of efficiency development of such long-lead resources with timely actions to establish or maintain eligibility for or capture available tax or other financial incentives or address operational needs. "(B) For an electrical utility to capture available tax or other financial or operational incentives for South Carolina ratepayers in a timely manner, the commission may find that actions by an electrical utility in pursuit of the directives in Section 58-37-35(A) are in the public interest, provided that the commission determines that such proposed actions are in the public interest and reasonably balance economic development and industry retention benefits, capacity expansion benefits, resource adequacy and diversification and potential risks, costs, and benefits to ratepayers and otherwise comply with all other legal requirements applicable to the electrical utility's proposed action. For the South Carolina Public Service Authority, the Office of Regulatory Staff and the Public Service Authority's board of directors shall apply the same principles described in this subsection in evaluating and approving actions proposed by the management of the Public Service Authority to achieve the objectives of this section." 2025 Act No. 41, SECTION 41, provides as follows: "SECTION 41. (A) Five years after the effective date of this act, the Office of the Regulatory Staff shall prepare a report, to be filed with the Public Utilities Review Committee and the General Assembly, to address the implementation of Article 24, Chapter 27, Title 58 as it relates to the following areas: "(1) assessing the functioning of the procedures established by section with recommendation for any changes required to ensure their efficient functioning, to promote regulatory efficiency, and to make further the establishment of just, reasonable, and fair rates; "(2) assessing the effect of rates on ratepayers of all classes; "(3) assessing the reliability of the electric system and whether investments made by electric utilities increased reliability compared to any change in electric utility rates experienced by ratepayers within the same timeframe; and "(4) any other information requested by the General Assembly to be included within the report. "(B) The Office of Regulatory Staff may engage a qualified, independent third party to assist in preparation of the report. "(C) All expenses and charges incurred by the Office of Regulatory Staff in the performance of its duties within this section may be defrayed by assessments made by the Comptroller General against the regulated electrical utilities regulated and based upon twenty-five percent of the gross revenues collected by such electrical utilities from their business done wholly within this State in the manner set out in Section 58-4-60 for other corporations." 2025 Act No. 41, SECTION 42, provides as follows: "SECTION 42. Upon passage of this act, Dominion Energy shall evaluate the process for converting the Wateree Generating Station from coal-fired generation to biomass-fired generation. Biomass-fired generation includes, but is not limited to, generation from the firing of wood pellets and wood chips. Dominion Energy must make a report concerning the conversion process to the Public Service Commission and General Assembly by no later than January 13, 2026." 2019 Act No. 62, SECTION 14, provides as follows: "SECTION 14. The provisions of Section 58-41-20 shall not be interpreted to supersede the conditions of any settlement entered into by an electrical utility and filed with the commission prior to the adoption of this act." Effect of Amendment 2025 Act No. 41, SECTION 17, made nonsubstantive changes.