Utility makes bid to buy Santee Cooper

An out-of-state utility has submitted a proposal to buy some or all of Santee Cooper, a sign that talks to sell the state-owned utility are heating up, The State newspaper has learned.

At least three more utilities soon are expected to submit their own written proposals, S.C. Gov. Henry McMaster’s office told The State on Monday. The governor’s office also is searching for an investment bank to begin evaluating the value of Santee Cooper’s assets, it said.

That news comes four days after McMaster sent a letter to S.C. lawmakers promising he would bring them an offer to buy Santee Cooper, which is saddled with $4.3 billion in debt from an scuttled attempt to build two new nuclear reactors in Fairfield County.

The Richland Republican says he wants to guarantee Santee Cooper’s customers do not have to pay for the reactors, abandoned after nine years of construction delays and almost $10 billion in costs.

First, McMaster must broker a deal with at least one of the four unidentified Fortune 500 power companies that privately have declared their interest in buying some or all of the Moncks Corner-based utility.

Then, he must persuade the S.C. Legislature to sign off on that deal. Many lawmakers are wary of selling the state-owned utility, but none have recommended an alternate solution to the nuclear fiasco.

“Selling Santee Cooper at a fire-sale price and in an environment where the state is begging buyers to undervalue the public utility’s true worth would have disastrous implications,” S.C. House Speaker Jay Lucas, R-Darlington, told The State. “The only responsible course of action is to receive an accurate valuation of Santee Cooper and not sell it for less than it’s worth.”

Negotiating Santee Cooper’s sale has been McMaster’s top priority since August, taking a backseat only to Hurricane Irma in early September, his office said.

Two days after the reactor project’s abandonment, McMaster called the chief executives of Charlotte-based Duke Energy, Georgia-based Southern Co. and Virginia-based Dominion Energy about buying either Santee Cooper’s 45-percent stake in the mothballed nuclear project or the utility itself, his office said. McMaster, governor since Nikki Haley resigned in January to join the Trump administration, chose those companies because of their size and proximity to the Palmetto State, his office said.

Soon afterward, interest exploded, his office said. McMaster fielded calls from across the country and world about Santee Cooper and the reactors.

Talks with more than a dozen potential buyers began in earnest in late August, McMaster’s office said. Some were crossed off the list after it became apparent they were too small to pull off the purchase.

The governor hosted chief executives from six utilities at his office or the Governor’s Mansion, sometimes on weekends and on Labor Day, his office said.

McMaster also flew to Washington, D.C., on Sept. 26 to meet with U.S. Energy Secretary Rick Perry about his agency’s loan-guarantee program for nuclear construction projects, which McMaster considers key to finishing the V.C. Summer reactors.

Some companies signed nondisclosure agreements. A group of potential buyers also was granted access to a virtual “data room” set up by Santee Cooper. That password-protected folder is filled with confidential details of the utility’s finances and operations – meant to help potential buyers kick the tires on Santee Cooper before making an offer.

At least four Fortune 500 utilities still are in talks with the governor, sources familiar with the negotiations have told The State. The governor’s office would not confirm the number, nor would it name the companies.

But, it said, companies have shown interest in Santee Cooper’s growing base of customers that it sells power to directly, largely along the Grand Strand, and its long-term contract to sell electricity to 20 electric cooperatives with more than 764,000 customers.

None of the Fortune 500 companies have committed to finishing the V.C. Summer project anytime soon, one of McMaster’s original goals, two sources close to the talks said.

However, some have expressed interest in buying and preserving the unfinished reactors, which could be finished at a later date if the changing regulatory environment increases the demand for nuclear energy, sources said.

If McMaster can broker a deal for Santee Cooper, he then will have to sell it to legislators.

Many are wary, as are McMaster’s opponents in the June 2018 GOP primary race for governor, who also have not presented alternate solutions.

Lt. Gov. Kevin Bryant, an Anderson Republican running for governor, has warned the state must not “sell Santee Cooper at the bottom of the market.”

“We, ultimately, must obtain top dollar for a multibillion-dollar asset of the taxpayers, but only if it is determined that is the best course of action,” Bryant wrote in an op-ed. “Knee-jerk reactions for the sake of political expediency are not the solution.”Yeah, but at the moment

Another primary opponent, Charleston attorney Catherine Templeton, last month told a GOP group, “You don’t sell your business when everybody knows it’s in bad shape.”

Reached Monday, several lawmakers said all options must be on the table as the General Assembly returns to Columbia in January to sort out the V.C. Summer nuclear fiasco.

Those legislators want to know more about Santee Cooper’s worth, and whether selling a state-owned company to a for-profit utility would hurt customers in the form of higher electricity bills down the road.

At least one utility has discussed freezing rates temporarily as part of the deal, McMaster’s office said.

“Protecting the ratepayer and S.C. taxpayer is at the pinnacle,” said House Majority Leader Gary Simrill. “To short-sell Santee Cooper only for the ratepayer to be hit again is certainly not an action I’d want to take.”

This story was originally published October 9, 2017 at 6:45 PM with the headline "Utility makes bid to buy Santee Cooper."