Emails: Santee Cooper lobbyists tried to thwart governor's plans to sell utility

A team of lobbyists hired by Santee Cooper has worked to undermine Gov. Henry McMaster's proposal to sell the state-owned utility, emails released by the governor's office Tuesday show.

A trove of once-secret documents shows one Santee Cooper-paid lobbyist asked a state senator to "publicly say Santee Cooper is not for sale," no matter how attractive an offer from an out-of-state power company might be.

Another contract lobbyist suggested in a memo that if the state agency could not quickly present lawmakers with a proposal to protect its customers from higher bills related to the failed V.C. Summer nuclear project, "we will be at a disadvantage with House leadership to generate support against takeover offers."

A Santee Cooper lobbyist also weighed in on the wording of a proposed letter to House and Senate members, saying the utility should mention more prominently its role in paying for economic development incentives used to land Volvo, calling it "the shiniest object" for lawmakers to consider.

To top it off, McMaster said Tuesday, the agency on Feb. 23 secretly hired an investment bank, Centerview Partners, paying the firm a $150,000-a-month retainer to assess Santee Cooper's finances and help the company address potential offers.

Those emails were among 1,236 pages of once-secret documents that McMaster was to release to S.C. lawmakers Tuesday evening. In an accompanying letter, the Richland Republican describes Santee Cooper as a "rogue, self-interested state agency" and calls on lawmakers to begin fielding formal offers to buy and privatize the 84-year-old utility.

Document demand

McMaster demanded Santee Cooper turn over the records on March 6, suspecting the utility was meddling with his push to sell it.

In a March 19 letter surrendering the emails, Santee Cooper's acting board chairman Bill Finn wrote McMaster that "we found a couple drafted by our outside lobbyists, prior to our meeting with you, which refer to a potential sale and either suggest or imply opposition to it."

"These communications were not in keeping with our instructions to them and we have addressed the issue by communicating to the lobbyists that any further communications of this type will result in termination of their service," Finn wrote.

Previously, Finn and several of its top executives had met with McMaster on Feb. 20 to assure him that the state agency's lobbyists explicitly had been instructed not to interfere with the effort to sell Santee Cooper. Those employees were instructed only to provide information requested by lawmakers and State House staff, Finn wrote McMaster in a letter.

But the governor was unconvinced, sending the Moncks Corner-based power company a formal demand for documents just after his meeting with Finn and other Santee Cooper leaders.

McMaster has worked since August to sell Santee Cooper, saying a sale is the only way to protect its customers after the utility and investor-owned SCE&G abandoned the construction of a multibillion-dollar nuclear project in Fairfield County.

A handful of out-of-state power giants have shown interest, most notably Florida-based NextEra Energy, which has briefed lawmakers on a possible bid. Within the Palmetto State, Greenville-based investment firm Pacolet Milliken is considering an offer for Santee Cooper. So is the utility’s largest customer, a group of 20 cooperatives that buys most of Santee Cooper’s power.

But only the General Assembly can sell Santee Cooper, and some lawmakers are skeptical of the idea – citing Santee Cooper electric rates that are among the lowest in the state and the utility’s role in economic development projects.

'Not for sale'

Emails show Santee Cooper lobbyists — a team that doubled in January with the hiring of contract lobbyists Dwight Drake and Fred Allen — have worked to convince lawmakers of the utility's value to the state.

On Feb. 6, Drake wrote an internal memo saying he had spoken to state Sen. Brad Hutto, telling the Orangeburg Democrat that Santee Cooper was expecting an offer from NextEra.

"Asked him, that no matter how attractive it looked, to publicly say Santee Cooper is not for sale," Drake wrote. "Said he would do and said it would be helpful if (state Sen. Larry) Grooms and (state Sen. Stephen) Goldfinch would do likewise. Told him we would work on that."

When forwarded that email, Santee Cooper's interim chief executive, Jim Brogdon, replied: Thanks Dwight."

The utility's top attorney, Michael Baxley, responded: "Thanks, Dwight. Well done."

Reached Tuesday, Hutto said he had no recollection of that conversation and had not been offered talking points.

"I swear, I don't recall that," Hutto said. "I talk to Dwight a lot. First of all, I don't take orders from Dwight Drake. But I don't remember this."

Goldfinch said a number of lawmakers who were briefed on NextEra's offer wanted to hear Santee Cooper's take on the proposed deal. But the Georgetown Republican doesn't think Santee Cooper lobbyists answered those questions improperly.

"What's the counterpoint to this proposed buyout? Those are reasonable questions from legislators to a quasi-state agency," Goldfinch said. "They are, in my opinion, duty-bound to answer those questions."

State Sen. Larry Grooms, R-Berkeley, defended Santee Cooper as well. Emails show he provided a Santee Cooper lobbyist with details of NextEra's offer for the state-owned utility.

On Feb. 7, in response to concerns about NextEra's lobbying efforts, Santee Cooper interim chief executive Jim Brogdon wrote an email to lobbyist Geoffrey Penland asking if the agency needed to recruit its industrial customers to publicly support Santee Cooper.

"Is the time right to get our industrial customers engaged?" Brogdon wrote.

Later, in the email thread, contract lobbyist Allen agreed. "Also, if NextEra is working our home (legislative) delegation, we might need to consider retail customer engagement as much as industrial."

On Feb. 9, Santee Cooper contract lobbyist Allen forwarded a message from Goldfinch in which the senator had expressed tentative praise for the potential NextEra offer.

"Not sure what has dampened Goldfinch's outlook," Allen wrote to Drake. "I will have a discussion with him."

In a Feb. 11 internal email, Drake proposed edits to a draft letter that was to be sent to S.C. legislators. He suggested moving up wording about Santee Cooper's role in helping recruit Swedish-based automaker Volvo to South Carolina.

"As I said on the phone Friday, that's the shiniest object (not to mention that it has the added advantage of being true) that we have," Drake wrote. "I have tried to tie the rates and State ownership discussion to the Volvo/jobs decision."

Efforts to reach Drake on Tuesday were unsuccessful.

In his response to Drake, Santee Cooper lobbying director Richard Kizer wrote he agreed: "We need to increase our message opportunities regarding our value to the state (while correcting misinformation where appropriate)."

Also on Feb. 11, contract lobbyist Allen wrote to full-time Santee Cooper lobbyist Geoffrey Penland that at least three House leaders had directed Santee Cooper to "put forward our maximum offer for ratepayers relief."

"We need to do this as clearly and aggressively as possible," Allen wrote. "Until that request has been met, we will be at a disadvantage with House leadership to generate support against takeover offers."

Another scuffle

Santee Cooper spokeswoman Mollie Gore said the utility has not fired any of its lobbyists after reviewing the emails.

Gore confirmed Santee Cooper had hired Centerview Partners. She said a public board meeting to approve the consulting contract was not required. "We execute contracts like that all the time."

Gore said the investment bank was hired to assess Santee Cooper's finances and assets so the utility can answer lawmakers' questions about offers from private companies, not to push back against those offers.

"It helps us inform stakeholders," Gore said. "It's an exercise to make sure we can provide accurate information for the Legislature to consider in the event that they get offers for Santee Cooper."

The scuffle over Santee Cooper’s lobbying records is the latest run-in between Gov. McMaster and the state-owned utility.

Last September, McMaster forced the utility to turn over a long-secret February 2016 report that showed Santee Cooper and investor-owned SCE&G were aware of critical problems hampering the doomed V.C. Summer project.

In December, McMaster ousted former Santee Cooper board chairman Leighton Lord, threatening to fire him over the utility’s response to the project’s problems and its ultimate abandonment. After a brief challenge, Lord resigned.

On March 7, McMaster tapped an ally, former S.C. Attorney General Charlie Condon, to take over as chairman of Santee Cooper’s board.

This story was originally published March 27, 2018 at 4:57 PM with the headline "Emails: Santee Cooper lobbyists tried to thwart governor's plans to sell utility."