Mount Holly Aluminum Smelter Faces Energy Cost Challenges Amid South Carolina's Power Rate Hikes

The Mount Holly aluminum smelter, operational since 1981, is raising alarms about rising energy costs that threaten its viability and the economic benefits it brings to South Carolina. As the largest direct customer of Santee Cooper, Mount Holly consumes 400 megawatts of power—equivalent to the daily energy needs of 250,000 homes—making energy costs a critical factor in its operations.

Currently, energy expenses account for approximately 40% of Mount Holly's total production costs. With the smelter producing primary aluminum, a commodity whose price is set on the global market, the facility cannot pass on increased costs to consumers. This situation has led to the closure of many U.S. smelters over the past two decades, with Mount Holly being one of only four remaining in the country, now representing a mere 2% of global aluminum production.

A recent economic impact study from the Darla Moore School of Business at USC highlighted that Mount Holly supports 1,439 jobs and contributes over $770 million annually to the state’s economy. However, higher power costs are hindering the smelter from returning to full production, which could create an additional 455 jobs and inject another $100 million into the local economy.

During a Senate Judiciary Committee meeting, representatives from Mount Holly expressed their concerns regarding South Carolina's competitive energy rates. They noted that while utility CEOs claimed rates were competitive, the reality for large manufacturers is starkly different. For instance, Santee Cooper's rates for large manufacturers are projected to rise from $54 to $63 per megawatt hour by April 2025, a 15-16% increase. In contrast, similar operations in Kentucky pay 40% less for power.

The representatives emphasized the need for reform to address these challenges, advocating for a \"reinvestment rate\" to support existing manufacturers and encourage job growth. They also called for increased competition in the energy market, suggesting that large manufacturers should have the option to source power from outside their designated utility or generate their own energy on-site.

The committee's discussions underscored the urgency of addressing energy costs to retain and grow manufacturing jobs in South Carolina. As the state grapples with the implications of rising power rates, the future of Mount Holly and its significant economic contributions hang in the balance. The committee's forthcoming legislative proposals will be crucial in shaping the energy landscape and supporting the state's manufacturing sector.