Dominion Energy has offered to take over and manage Santee Cooper to help it save costs after the state-owned power company racked up $4 billion in debt on a failed nuclear project.
In a Monday letter to Santee Cooper chief executive Jim Brogdon, Dominion CEO Tom Farrell wrote the “unique management arrangement” would save Santee Cooper’s electric customers “hundreds of millions of dollars in overhead, fuel and capital related costs.”
The proposed arrangement also would save Santee Cooper from being bought by another investor-owned utility, which “would in our view only result in higher rates for Santee Cooper’s electric customers,” Farrell wrote. Dominion has not offered to purchase Santee Cooper, which has 1,650 employees and is based in Moncks Corner.
A Dominion spokesman would not say Tuesday whether that offer would stand if the Virginia-based power utility does not complete its proposed purchase of Cayce-based SCANA — Santee Cooper’s partner in the failed, $9 billion V.C. Summer nuclear expansion project.
If both offers are accepted, an out-of-state power company suddenly would have a hand in providing electricity to millions of S.C. residents.
Santee Cooper spokeswoman Mollie Gore said Dominion’s management proposal is not surprising. Santee Cooper itself has worked to cut costs, shedding about 150 employees — virtually all in retirements — and $40 million from its annual budget over the past year.
“This was not unexpected in terms of an idea to be floated,” she said. “They probably will not be the only company tossing that idea into the ring.”
Dominion’s letter also was sent to three of the state’s top elected leaders: Gov. Henry McMaster, Senate President Pro Tempore Hugh Leatherman and House Speaker Jay Lucas — all Republicans.
McMaster, a Richland Republican, has pushed lawmakers to sell the state-owned utility to pay off its nuclear debt so those costs are not passed on to the roughly 2 million South Carolinians who rely on Santee Cooper’s electricity, either directly or through an electric co-op.
Santee Cooper customers currently are paying an extra $5 on their electric bills for the project. The company has said monthly bills will rise another $8 for the average customers until the debt is paid.
A legislative committee, including McMaster, has met several times this fall to study the idea of selling Santee Cooper, and a handful of utilities privately have expressed interest in buying it.
“This is exactly why Go.McMaster successfully pushed to establish a process for evaluating Santee Cooper and taking bids for it,” McMaster spokesman Brian Symmes said. “If Dominion has an interest in Santee Cooper, they should follow that process and submit a bid or a partnership proposal through the committee that’s been tasked with determining the utility’s future.”
Dominion’s proposal could be “part of a solution” that would be acceptable for Santee Cooper’s largest customer — the state’s 20 electric co-ops — according to Mike Couick, CEO of the Electric Cooperatives of South Carolina.
“What I’ve seen ... in the letter is consistent with a number of good ideas that have come from several utilities and other entities over the last 15 months that could be evaluated and compared one-to-the-other under the General Assembly’s ‘test-the-market’ process,” Couick said. “We need to trust in the process of testing the market.”
The letter came as Dominion asked the S.C. Public Service Commission Tuesday to reject Santee Cooper’s request for a $351 million payout if the Virginia-based utility is allowed to buy SCANA.
In the letter, Farrell wrote that Santee Cooper’s $351 million request “highlights the (nuclear) cost recovery concerns at Santee Cooper and the impact of those costs on its customers.”
Farrell says the arrangement would allow Santee Cooper to remain state owned, tax exempt and keep an “A+” credit rating.
Farrell wrote that Dominion could cut costs “in the areas of management services and company overhead (for example, human resources management, accounting services, information technology, supply chain management, etc.), fuel and power procurement, capital allocation and potentially other operating costs.”
Santee Cooper would remain independent and state owned and retain its low operating costs, Farrell said.
“Santee Cooper is an excellent company which we greatly admire,” Farrell wrote. “I would be happy to meet with you to discuss details of this arrangement and how I believe we can work together, upon completion of the Dominion Energy/SCANA merger, to leverage our combined resources to save Santee Cooper electric customers money, providing continued excellent service at the lowest possible rates for many years to come.”
State Rep. Murrell Smith, the Sumter Republican who co-chairs the legislative committee studying Santee Cooper’s sale, said he had not seen Dominion’s offer by Tuesday afternoon. Neither had state Sen. Brad Hutto, an Orangeburg Democrat on that committee.
“I appreciate that offer, but they’re going to have to follow the process that’s been set up by the General Assembly,” Smith said.