Florida-based power behemoth NextEra Energy is floating a $15.9 billion proposal to buy Santee Cooper to S.C. lawmakers.
The state-owned utility went on the auction block after it and Cayce-based SCANA abandoned a decadelong, $9 billion effort to build two new nuclear reactors in Fairfield County.
In the wake of that debacle, some S.C. leaders say the only way to recoup Santee Cooper’s nuclear-related debt is to sell the utility.
NextEra executives have briefed GOP state Sens. Larry Grooms of Berkeley and Luke Rankin of Horry on their plans for a bid to buy Santee Cooper, those senators told The State on Thursday.
NextEra plans to brief more lawmakers as it gauges legislators’ interest in a deal before seeking their approval for the acquisition, Grooms said.
“This is the framework of a potential offer,” said Grooms, whose Senate district includes Santee Cooper’s Moncks Corner headquarters.
Grooms said NextEra wants to buy Santee Cooper’s power plants and transmission lines, but not its water system, lakes or real estate holdings.
The Senate Transportation Committee chairman said a NextEra deal would pay down some, but not all, of Santee Cooper’s $8 billion in debt – about half related to the failed, 10-year effort to build two nuclear reactors in Fairfield County.
It also would freeze Santee Cooper’s electricity rates for five years. The utility sells most of its power to electricity co-ops that have 1.5 million S.C. customers. However, Santee Cooper also has 177,000 customers that it directly serves along the Grand Strand.
Grooms and other lawmakers are wary NextEra could raise power bills in year six.
NextEra has said the deal would be worth $15.9 billion over a 30-year span, Grooms said. However, not all of that value would be up-front cash.
Several State House sources confirmed Grooms’ understanding of the conceptual proposal.
Sen. Rankin declined to comment on the specifics of the deal, calling the offer “squishy” and “vague.”
The proposal is similar to the one that NextEra pitched to state lawmakers months ago, one source said.
S.C. Gov. Henry McMaster has been recruiting out-of-state companies, including NextEra, to buy some or all of Santee Cooper since last August, just after the V.C. Summer construction went bust. The Richland Republican says selling Santee Cooper is the only way to ensure the utility’s customers aren’t stuck with its $4 billion in nuclear construction debt.
But, his office said Thursday, the governor would veto any proposal to purchase Santee Cooper that does not eliminate that debt.
NextEra spokesman Rob Gould said Thursday his utility would not comment.
Santee Cooper spokeswoman Mollie Gore said her utility has not been at the table for any NextEra negotiations.
“We haven’t had any ability to consider how this might impact our employees, customers, bondholders or any of our statewide operations.”
Neither Grooms nor Rankin were thrilled with the proposal.
Along with other senators aware of the deal, they are skeptical that a for-profit utility would buy a nonprofit power company and not raise power bills to cover the expense.
“If you’re going to pay a high price for Santee Cooper, you’re going to have to get the money from ratepayers to service the debt,” said state Sen. Chip Campsen, R-Charleston.
Rankin said he would rather Santee Cooper remain state-owned.
“Despite what some say, it’s demonstrably, objectively proven that Santee Cooper enjoys the lowest rates in the state as compared to an investor-owned utility,” Rankin said. “It’s affordable. It’s dependable.”
Senate Minority Leader Nikki Setzler, D-Lexington, said he has heard of the offer.
But, he said, S.C. lawmakers, who must approve any deal to sell Santee Cooper, already have their hands full evaluating Virginia-based Dominion Energy’s $14.6 billion offer to buy SCANA.
“I don’t see us dealing with (a decision to sell Santee Cooper) any time in the near future,” Setzler said.
Senate Majority Leader Shane Massey, R-Edgefield, said he and other lawmakers have talked with NextEra lobbyists about the potential sale of Santee Cooper. But, he added, “I don’t remember ever hearing $15.9 billion.”
Santee Cooper’s largest electricity buyers – the state’s 20 electric cooperatives – haven’t seen the offer, according to Mike Couick, president of an association that represents them. But Couick said the co-ops want the General Assembly to begin fielding and evaluating offers for the 84-year-old power company. The co-ops also are considering submitting their own bid to Santee Cooper.
“The beauty of ... testing the market is that you’ll get lots of good ideas, and you’ll have a structured way to evaluate the value of each of them,” Couick said. “I would hope that NextEra is just the first of many offers that could come to the General Assembly in an evaluative process.”
Santee Cooper spokeswoman Gore said the utility welcomes “any objective valuation of our operations.”
“We do think that such an evaluation would demonstrate our continued value to South Carolina as a state-owned utility.”
Grooms said he is open to any offer that best protects Santee Cooper ratepayers. But, he noted, Santee Cooper’s tax-exempt status gives it a lower cost of business than private utilities like NextEra. As a result, he worries any sale would bring a “massive increase in rates.”
“There are certain fundamentals to mathematics,” Grooms said. “Two plus two will always equal four.”