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Santee Cooper’s largest customer unhappy with state utility’s rates, reliance on coal

Santee Cooper’s largest customer Monday unloaded a series of complaints about the state-owned power utility but largely was shut down.

Central Electric Cooperative — which buys three-fifths of Santee Cooper’s power for the state’s 20 electric co-ops and the 1.5 million South Carolinians that they serve — told the utility’s board that Santee Cooper’s electricity costs are too high, the utility may be too reliant on coal-fired power plants, and a long-term contract unfairly costs co-op customers millions of dollars.

The meeting was yet another display of the tensions between Santee Cooper and Central.

Central currently is suing to block the state-owned Santee Cooper from charging it and the co-ops any more for a failed V.C. Summer nuclear plant construction project. Contractually, the co-ops are on the hook for nearly $3 billion of Santee Cooper’s $4 billion in nuclear debt.

Central and the co-ops also have submitted an offer to buy parts of Santee Cooper if the state decides to sell or break up the 84-year-old state agency.

A dispute resolution board — made up of six Santee Cooper representatives and six co-op members — was split 50-50 Monday on whether to take action to address most of the concerns raised by Central chief executive Rob Hochstetler. It voted to approve only Hochstetler’s request to study whether a coal-fired power plant — the Cross Generation Station Unit 2 in Pineville — should continue to be used.

The co-ops plan to take their grievances to arbitration, Central attorney John Tiencken told The State.

Santee Cooper board members, meanwhile, complained they felt ambushed by Hochstetler’s presentation, which included a series of slides showing Santee Cooper’s wholesale power costs are higher than nearby investor-owned, for-profit utilities, including SCE&G, Duke Energy and Georgia Power.

“The fact that you didn’t give us any of this data or the slides ahead of time gives us no opportunity to have any real communication here,” Santee Cooper board member Dan Ray said. “You didn’t share it with us ahead of time, Rob. That’s not the spirit of communication.”

Hochstetler also complained Santee Cooper is charging Central a marked-up rate for a long-term contract to supply gypsum that quickly soured.

In 2005, Santee Cooper entered into a decades-long contract to supply gypsum — a byproduct of coal-fired power production — to American Gypsum, a company that uses the mineral in wallboard.

As Santee Cooper has shifted away from using coal to generate power, it hasn’t produced enough gypsum to meet the contract. Santee Cooper now spends more than $10 million a year to buy the material for American Gypsum, Hochstetler said, arguing the co-ops shouldn’t have to pay more for a bad business deal that the utility negotiated.

Ray argued buying gypsum is more economical than running Santee Cooper’s coal-fired plants to produce the byproduct, and there weren’t enough votes on the dispute board Monday to force the utility to change its rates.

Hochstetler also raised concerns about the condition of a pair of aging Santee Cooper coal-fired plants — Pineville’s Cross Station and Winyah Station in Georgetown. He asked Central be allowed to study the power plants to learn whether Santee Cooper should be using alternatives to coal to produce power.

Santee Cooper board members again demurred.

They said they don’t want the General Assembly, which is studying Santee Cooper’s possible sale, to think the utility is giving one potential bidder special access to information.

“It’s not in anybody’s best interest for us to upset the General Assembly any further,” said Santee Cooper board member Peggy Pinnell.

The board voted 7-5 to study the viability of the 36-year-old Cross 2 unit but rejected Hochstetler’s request for Santee Cooper to cooperate with Central’s study of the 44-year-old Winyah Station.

Avery G. Wilks is The State’s senior S.C. State House and politics reporter. He was named the 2018 S.C. Journalist of the Year by the South Carolina Press Association. He grew up in Chester, S.C., and graduated from the University of South Carolina’s top-ranked Honors College in 2015.
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