Post and Courier
April 23, 2024
BY THE EDITORIAL STAFF
The proposal to eliminate South Carolina’s still-new consumer protections and greenlight a massive new natural gas plant near Canadys has generated counter calls by environmentalists and ratepayer advocates to target one of the state’s biggest emerging energy hogs: computer data centers.
First former PSC Commissioner Tom Ervin and now the S.C. Small Business Chamber of Commerce are calling on lawmakers to stop allowing Google and other companies to build new data centers, while other opponents of the S.C. Energy Security Act silently or not-so-silently applaud.
As appealing as that sounds, though, we’re not sure it’s appropriate for the state or local communities to put a moratorium on a particular kind of business just because it uses a lot of electricity, or even a lot of water, both of which data centers do while adding little new employment.
What is definitely appropriate, though, is to stop using public resources to entice them to move to our state. Even Senate Republican Leader Shane Massey took up that cause last week, telling his fellow senators “I don’t know why we are recruiting data centers that are just electricity hogs, that are not creating a lot of jobs.”
Yet other legislators seem determined not only to keep the current incentives in place but also to add more.
South Carolina already has at least nine large data centers and four more in the works, largely as a result of state and local economic incentives. The S.C. Daily Gazette reports that those four under development are projected to use 800 megawatts of power daily; that’s about the same amount of electricity it takes to power 500,000 of South Carolina’s 2.4 million homes. And the data centers’ appetite is only growing; the Gazette says they consumed 4% of electricity nationally in 2022 and are expected to consume 6% by 2026.
Last year, Google agreed to build a $510 million data center near Summerville after the Dorchester County Council voted to slash its property tax rates to 4% for at least four decades, and exempt the company from the reassessment that usually raises the taxable value of property every five years.
In addition, Dominion South Carolina agreed to provide discounted electricity to the data center. That deal, which the S.C. Public Service Commission approved in February, gives Google a special “economic development rider” rate of 6 cents for every kilowatt hour, compared to 14 cents for residential customers.
And those deals came on top of a law the Legislature passed back in 2012 to exempt large data centers from sales taxes on electricity as well as computer equipment, hardware and software.
Last week, as calls for outlawing new data center subsidies or even the centers themselves were mounting, the Senate Finance Committee amended an economic incentives bill to expand that sales tax exemption, so it covers other businesses related to data centers. And it did so without a single person explaining or asking why the state should give this additional tax benefit to data centers.
Also last week, the Senate Judiciary Committee stripped a provision out of H.5118, the House-passed utility bill, that would have prohibited the PSC from granting lower rates to data centers like the one Dominion gave to Google’s Summerville center.
We understand why cash-strapped counties would be tempted to lure data centers, which provide few jobs but pay huge property taxes, even after the huge discounts the counties hand out.
And we certainly understand why Dominion would want to help recruit companies that are going to drink up so much electricity: The main way investor-owned utilities make their guaranteed profits is by building new power plants.
But it’s disingenuous to participate in such deals at the same time the utility is telling our Legislature it has to roll back essential consumer ratepayer protections to rush through the construction of a new mega-power plant or else the lights will go out. And it’s irresponsible for counties or publicly owned utilities to participate unless they have unlimited energy and simply can’t foresee a time when the data centers would force utilities to build expensive new capacity.
Data centers aren’t the only reason utility executives and their legislative supporters say we need to fast track legislation to speed up construction of new power plants: South Carolina led the nation in population growth last year, and we keep breaking records for huge new manufacturers. But they are a huge part of the energy projections.
Under those circumstances, it seems nearly criminal that a utility would grant a special rate to data centers — or that the PSC would allow it. It seems nearly criminal too that the Legislature would allow the state or even local governments to offer incentives to lure new centers here to use up our electricity, and our water.
Whatever happens with the larger utility bill, the Legislature needs to put an end to the enticements for data centers. That means stripping the expanded sales tax exemption out of H.4087 — if not removing the existing tax exemption. It means reviving the House-passed ban on cut-rate electricity for data centers — either as part of passing H.5118 or, if that’s not going to happen this year, in stand-alone legislation. And as Sen. Massey suggested, it means putting an end to the legislatively authorized local incentives that counties are giving data centers, to the detriment of our entire state.