The state of South Carolina has received four legitimate offers to buy all of Santee Cooper and pay off the state-owned utility’s $8 billion in debt, a consultant wrote in a report released late Friday.
At least three of the non-binding offers, subject to further negotiation, would ensure the 2 million South Carolinians who get their power from Santee Cooper would pay no more for the failed V.C. Summer nuclear project if the S.C. General Assembly decides to sell the utility, according to the report from Virginia-based ICF.
The 40-page report indicates the sale of Santee Cooper would leave its customers paying less for the V.C. Summer debacle than customers of SCE&G, the majority partner in the failed $9 billion project. SCE&G customers collectively must pay an additional $2.3 billion for two unfinished reactors over the next 20 years even that utility was bought by Virginia-based Dominion Energy earlier this year.
Currently, the customers that Santee Cooper directly serves are on the hook to pay roughly $6,200 more per household in higher rates for the unfinished reactors over the next four decades. Customers of the 20 co-ops who buy power from Santee Cooper contractually are obligated to pay about $4,200 per household for the failed project.
However, the offers before the General Assembly could lower Santee Cooper’s electric rates from 2 percent to 14 percent over the next 20 years, ICF wrote to lawmakers.
The state received 15 bids from 10 parties.
There were seven offers to buy all of Santee Cooper.
But only four offers — including two from utilities “with significant operations in the Southeast” — met the criteria that lawmakers have given ICF to evaluate a sale, ICF wrote. Those offers valued Santee Cooper at $7.9 billion to $9.2 billion.
ICF said it valued Santee Cooper at between $8.1 billion and $10.1 billion.
There also were two offers to buy parts of Santee Cooper, four offers to take over its management and two offers to enter into a long-term agreement to supply power to the 84-year-old power company, a move that could allow Santee Cooper to close its aging power plants.
ICF’s long-awaited report is a victory for Gov. Henry McMaster, a Columbia Republican who has pushed the General Assembly to sell the Moncks Corner-based utility since it and abandoned the decade-long, $9 billion nuclear construction project in Fairfield County in July 2017.
Lawmakers, particularly in the state Senate, have been skeptical that a for-profit company can buy Santee Cooper, pay off its more than $8 billion in total debt, and still charge lower electric rates than the not-for-profit state agency.
But the offers in ICF’s report appear to do just that.
“This is a historic moment,” McMaster said in a statement. “There is no longer any significant reason to delay action needed to solve the Santee Cooper crisis. I ask that members of the General Assembly objectively review this report and place the interest of our state’s ratepayers and taxpayers first and those of the naysayers last.”
Powerful House Speaker Jay Lucas, R-Florence, also reacted positively to the ICF report.
“An initial review of the report confirms my goal of providing maximum relief for the ratepayers in this process,” Lucas said in a statement. “That continues to be the No. 1 goal for the House. I look forward to getting more information.”
Still, the offers mentioned in ICF’s report likely won’t be be enough to sway some state senators, including Berkeley Republican Larry Grooms, whose constituents include Santee Cooper customers and employees. Grooms and others have warned a buyer could fire many of Santee Cooper’s more than 1,600 employees to save costs.
Senators also appreciate Santee Cooper’s value as an economic-development engine.
“It’s like Groundhog Day a day early,” Grooms said in a statement Friday afternoon, an hour before lawmakers received the final report. “The report confirms what everyone already knew. Sure, there are folks willing to buy Santee Cooper, but as the report points out, a sale would be of questionable value to customers and of no value to the taxpayers of South Carolina. There’s nothing new here. It’s time to move on to long term solutions that protect ratepayers and taxpayers.”
ICF was hired by a special committee of lawmakers and the governor that has met several times to study the idea of selling Santee Cooper. The Virginia-based consultant will present its findings to the study committee Wednesday.
In a statement, the senators on the study committee said the report is an important step but doesn’t represent the committee’s final recommendation to the General Assembly.
“The information received today will be combined with the many of hours of testimony and the information received by the committee throughout the fall as the committee prepares recommendations to the General Assembly,” they wrote. “We expect this work will continue until which time the committee is prepared to provide the members of the General Assembly a well thought out recommendation for Santee Cooper’s future.”
Seventeen parties expressed interest in Santee Cooper at one point, ICF said. But only 10 submitted preliminary bids.
Only ICF knows the names of the companies who made the offers for all or part of Santee Cooper. Lawmakers have said keeping the bidders confidential will help the committee fairly pick the best offer. ICF said only that the 10 parties who submitted bids included “small and large electric utilities, large private investment firms, and industrial firms.”
Companies that privately have shown interest in Santee Cooper include Florida-based NextEra Energy, Charlotte-based Duke Energy, Virginia-based Dominion Energy, Greenville-based Pacolet Milliken Enterprises, Atlanta-based Southern Co., New York-based LS Power and South Carolina’s 20 electric co-ops – who together buy three-fifths of Santee Cooper’s electricity.
Dominion, which recently bought SCANA, has said it is interested in managing Santee Cooper – but not buying it.
ICF wrote the offers include “multiple pathways to achieve desired key outcomes, including cost savings, customer rate relief, in-state economic development, and greater accountability.”
Some of the bidders would keep Santee Cooper’s headquarters in Moncks Corner. Others would convert the building into more of an operations center, ICF wrote.
Any buyer could find cost savings by investing in more natural gas generation and moving away from Santee Cooper’s coal-fired power plants, ICF reported.
Any sale would have to appease the co-ops, who could opt out of their long-term contract to buy power from Santee Cooper if they don’t like the buyer, taking 60 percent of the utility’s business with them. But the co-ops have said they favor a sale or transformation of Santee Cooper that would lower their customers’ power bills.