On May 12, 2025, South Carolina Gov. Henry McMaster signed the South Carolina Energy Security Act (Act 41) into law. The significant, wide-ranging energy legislation is the result of bipartisan efforts to holistically address the unprecedented economic growth and corresponding generation needs of the state. The 72-page law seeks to achieve this goal through measures including provisions impacting South Carolina ratemaking, integrated resource planning, facilitation of new generation, expanded policy support for advanced nuclear resources, energy efficiency initiatives, new economic development rate design framework, and refinements to the existing regulatory process and state energy policy. Some of the law’s key provisions are described below.
Modernizing Electric Utility Base Ratemaking Process
Modeled after South Carolina’s existing Natural Gas Rate Stabilization Act, the Electric Rate Stabilization (eRSA)provisions of Act 41 allow an electric utility to elect to have its rates adjusted on a prospective basis. The utility must file quarterly monitoring reports subject to review by the South Carolina Office of Regulatory Staff (ORS). Adjustments to the utility’s rates under the eRSA must be based on need, identified in the quarterly report for the 12-month period preceding Dec. 31. A utility electing to adjust its rates pursuant to the eRSA must file a general rate case every five years. The act also allows ORS to add up to two employees for the purpose of carrying out its duties under the eRSA and directs ORS to study and report on the eRSA after five years, assessing its impact on rates, reliability and other information.
Energy Needs Assessment and Action Plan
The ORS must prepare a 10-year comprehensive energy assessment and action plan for South Carolina that recommends actions to ensure the availability of adequate, reliable and economical supply of electric power and natural gas to be approved by the General Assembly’s Public Utilities Review Committee (PURC). In preparing the plan, ORS must collaborate with interested stakeholders and present a comprehensive state-wide plan informed by the most recently approved Integrated Resource Plans (IRPs) of South Carolina electric utilities and the South Carolina Public Service Authority. Development of the plan is intended to ensure a reliable and reasonably priced energy supply in South Carolina that supports continued economic growth in the state.
Enhancing Resource Planning to focus on Transmission and Power System Reliability
Under Act 41, an electric utility’s IRP must include a report addressing updates to the utility’s transmission plan, describing planned transmission improvements specific to the siting of new resources identified in the IRP, and describing how the utility evaluated alternate transmission technologies. In reviewing a utility’s IRP, the South Carolina Public Service Commission (PSC) is directed to consider the utility’s compliance and reliability obligations set forth by the Federal Energy Regulatory Commission, the North American Electric Reliability Corporation, the SERC Reliability Corporation and the Nuclear Regulatory Commission. The PSC must also consider the need to support economic growth as part of the balancing factors used to determine whether to approve or reject an IRP.
Encouraging Development of New Generation and Energy Storage
The law enacts a variety of provisions targeted to facilitate the development of new generating resources and energy storage systems, from hydrogen-capable natural gas to clean energy resources such as advanced nuclear facilities and solar.
- Advanced Nuclear Resources. Act 41 sets a new state policy to promote the development and operation of advanced nuclear facilities in an economical manner as soon as reasonably possible. Utilities are encouraged to study opportunities for implementation of advanced nuclear facilities including small modular reactors and provide annual reports to the PSC and the PURC. The act establishes a nuclear advisory council within the Department of Commerce that will meet at least twice a year and provide recommendations about the development and management of nuclear energy and waste.
- Renewable Energy. The act finds that it is in the public interest for the electrical utilities to competitively procure targeted volumes of renewable energy and co-located energy storage resources consistent with volume targets identified in the utilities’ IRPs. The provision establishes a new statutory framework governing the competitive procurement of renewable energy (CPRE), including dual-state CPRE programs, and energy storage and expressly provides for ongoing PSC oversight of utility CPRE programs and recovery of costs. The act further encourages development of new solar resources by providing design and development standards for counties that have not adopted rural zoning rules or ordinances for solar facilities that require a footprint of more than 13 acres.
- Standalone Energy Storage. By Nov. 12, 2025, (six months from enactment of Act 41), the PSC must open a docket for the purpose of establishing for each electric utility a competitive procurement program for stand-alone energy storage facilities located in South Carolina.
- Natural Gas Generation at Canadys Site. The law grants Dominion Energy South Carolina (DESC) and the South Carolina Public Service Authority (Santee Cooper) the authority to jointly own one or more natural gas and related transmission facilities to be constructed at or near DESC’s former Canadys coal plant. This partnership will allow DESC and Santee Cooper to build a larger facility, share costs and take advantage of economies of scale.
- Expedited Agency Review of Energy Infrastructure Projects. As a matter of state policy, Act 41 provides that prompt siting, permitting and completion of energy infrastructure projects, energy corridor projects and brownfield generation projects are “crucial to the welfare of the state.” Consequently, the law instructs agencies for the next 10 years to engage in expedited review of applications for energy infrastructure projects.
- Facilitation of Certificates of Public Convenience and Necessity (CPCN). The law provides certain deadlines for the PSC to issue a final order regarding applications for a like facility (within 60 days of application) or for a CPCN (180 days from application).
- Encouraging Utilities to Evaluate Specific Resources. Through Act 41, the General Assembly encourages DESC to evaluate a joint resource, Duke Energy Carolinas and Duke Energy Progress (together, Duke Energy Companies) to evaluate energy storage resources; the Duke Energy Companies to evaluate hydrogen-capable facilities or place into service natural gas facilities; and Santee Cooper to evaluate facilities that use domestic wood products from South Carolina as an auxiliary fuel source.
Energy Efficiency (EE) and Demand-Side Management (DSM)
Act 41 articulates a new state policy that it is in the public interest to expand utility investment in and customer access to cost-effective DSM programs and directs the PSC to require utilities to plan for and invest in all reasonable, prudent and available EE and DSM resources that are cost-effective and energy-efficient technologies. Utilities are required to submit an annual report to the PSC describing the DSM programs implemented in the previous year and the results of such programs. If a utility fails to meet these EE/DSM requirements related to residential low-income customers, the commission may appoint a third-party administrator to carry out these duties if it determines that doing so is in the public interest and consistent with law. ORS must also evaluate benefits and costs of administrator models for DSM/EE requirements.
New Framework for Utility Economic Development Rates
Act 41 recognizes that the economic and financial wellbeing of South Carolina and its citizens depends upon continued economic development and industry retention and that electric utilities are critical to achieving this goal by offering affordable power that attracts jobs and associated development. Accordingly, Act 41 allows utilities to offer special rates, terms and conditions to existing and prospective customers who meet the requirements to be “qualifying customers” (existing customers with 20 MW need or new customers with 500kW need, 50 employees, and minimum $400,000 investment) or “transformational customers” (customers with 50 MW need, 500 employees, $100 million investment and appropriate designation by the South Carolina Department of Commerce). Qualifying customers may receive rates at or above the marginal cost, while transitional customers may receive rates as low as 25% below the marginal cost with a 10-year contract.
