South Carolina’s top elected leaders are taking steps toward selling Santee Cooper. But not without bickering.
S.C. Gov. Henry McMaster and leaders of the S.C. House and Senate can’t agree on who should appraise the value of the state-owned utility, which McMaster wants to sell to pay back power customers for Santee Cooper’s role in a botched nuclear project.
Senate President Pro Tempore Hugh Leatherman, R-Florence, and House Speaker Jay Lucas, R-Darlington, have hired a consulting firm to value the utility, paying the consultant $200,000.
But McMaster thinks lawmakers made the wrong choice. The Richland Republican pushed instead to hire a firm that includes the former Republican majority leader of the U.S. House.
Virginia-based ICF International, the firm that the legislative leaders hired, has been studying the Moncks Corner-based utility’s worth since late October. The firm plans to work for up to eight weeks on its appraisal. Leatherman and Lucas say they want that baseline appraisal before hearing any offers for the utility.
However, in a Nov. 21 letter obtained by The State, McMaster argued “it does not appear that ICF typically offers, or is positioned to provide, comprehensive evaluation services of this kind.”
McMaster prefers hiring New York-based Moelis & Co., an investment bank with experience brokering the sale of utilities.
In October, McMaster hosted a meeting at the Governor’s Mansion between State House leaders and Moelis representatives, including former U.S. House Majority Leader Eric Cantor, R-Va.
Along with the Nov. 21 letter to Lucas and Leatherman, McMaster passed along a proposal from Moelis to complete an appraisal of Santee Cooper’s value. McMaster’s office Monday would not disclose Moelis’ asking price for that appraisal, calling it proprietary.
The scuffle comes a little more than a month before lawmakers return in January to sort out South Carolina’s nuclear fiasco.
At the top of their agenda will be deciding how to protect customers of Santee Cooper and SCE&G. Those customers already have been charged billions of dollars for two abandoned nuclear reactors in Fairfield County.
While McMaster wants to sell Santee Cooper, the General Assembly is not yet sold on that idea.
But four months after SCANA and Santee Cooper pulled the plug on their $9 billion nuclear project, legislative leaders are preparing to discuss its sale.
McMaster has said Santee Cooper’s sale is crucial to the state’s recovery from the debacle, offering a way to repay money that customers already have paid for the doomed reactors.
McMaster’s office in talks with four out-of-state utilities to buy Santee Cooper. Those are: Florida-based NextEra, North Carolina-based Duke Energy, Georgia-based Southern Company and Virginia-based Dominion Energy.
The same four companies also want to buy Cayce-based SCANA, the majority partner in the nuclear debacle, to increase the size of their footprint in the Palmetto State, sources with knowledge of the talks have told The State.
SCANA’s stock has been in free fall, dropping to the low 40s from its 52-week high of almost $75 a share. The utility has hired its own investment banker, Morgan Stanley, to consider its possible sale, sources have told The State.
While McMaster and legislators agree on the need for a third-party appraisal of Santee Cooper’s worth, they disagree on who should do it.
Top lawmakers were put off by Moelis’ offer to appraise Santee Cooper and broker its sale. In return, Moelis said it wanted a sales commission of 0.4 percent of the deal’s value, Leatherman told The State.
“If we’re talking about a $10 billion deal, that means they’re going to get $40 million of S.C. taxpayers’ money,” Leatherman said.
McMaster’s office said the governor quickly turned down that offer, opting instead to ask – like lawmakers – for an appraisal alone, a far cheaper alternative.
But State House leaders already had agreed – even before meeting with Moelis – to pay ICF a flat $200,000 for an appraisal. And they do not appear intent on hiring Moelis, too.
“Gov. McMaster continues to potentially create a fire sale environment by aggressively pursuing a buyer for Santee Cooper without fully understanding its value,” Lucas said. “Hiring a brokerage firm led by Washington insiders who have candidly expressed an interest in making millions off of a deal is another reason why South Carolina taxpayers are frustrated with government.”