Why Santee Cooper is on the chopping block
S.C. Senate President Harvey Peeler on Wednesday moved to authorize Gov. Henry McMaster to sell Santee Cooper, saying it has become clear that offloading the state-owned utility is the best path forward after it racked up $4 billion in debt on a failed nuclear plant construction project.
The Cherokee Republican’s proposal came as a surprise and sparked fresh debate in the state Senate, where skeptical lawmakers represent the biggest hurdle to selling the 85-year-old power company. Peeler, an influential leader in the Senate, filed the bill a day after a contentious Senate hearing in which senators complained Santee Cooper executives came unprepared to answer basic questions about their operations.
“The time has come to sell Santee Cooper,” Peeler said on the Senate floor. “For almost two years, Santee Cooper has been looming over us. Their leadership is in crisis. They are crippled by debt, and it is clear to me that Santee Cooper cannot see their own way that works for our ratepayers and taxpayers of the state.”
McMaster has pushed lawmakers to sell Santee Cooper since August 2017. He says that’s the only way to ensure the two million South Carolinians who get the utility’s power — most of them through one of the state’s 20 electric cooperatives — don’t suffer rate hikes to pay off Santee Cooper’s debt from the failed V.C. Summer nuclear plant project.
Lawmakers began studying a sale last year and have received four credible — but anonymous — offers to purchase the entire utility. But they have squabbled for weeks about whether to pursue those bids.
“By introducing this legislation, President Peeler is showing clear and decisive leadership in response to a thoughtful, deliberate, and ongoing process to determine the value of Santee Cooper and the best way to protect South Carolina’s ratepayers and taxpayers,” McMaster said in a statement. “We’ve known all along that the one thing we can’t afford is inaction. This bold and necessary step moves us closer to the resolution of one of the state’s most pressing and impactful issues.”
But the resolution’s passage is not a sure thing.
Critics of selling Santee Cooper say they will try to block the resolution from passing the Senate. And during the Senate Finance Committee’s hour-long debate on the proposal Wednesday afternoon, several senators expressed heartburn at putting Santee Cooper’s fate in McMaster’s hands.
Senate Transportation Committee Chairman Larry Grooms, a Berkeley Republican whose district includes Santee Cooper’s headquarters, voted to filibuster the resolution on the Senate floor, if necessary.
“There needs to be a debate (on whether to sell Santee Cooper) at some point, and I do hope we have a debate,” Grooms said. “I’ll do anything and everything I can to prevent harm to the ratepayers.”
In a statement, Santee Cooper said it was caught off guard by the proposal and hinted it thinks the move is misguided.
“We are surprised at how quickly this resolution has come about, especially given that the House and Senate are both involved in ongoing evaluations of several options concerning Santee Cooper’s future,” spokeswoman Mollie Gore wrote. “Those reviews have focused on a data-driven process, one that we believe will lead to the best outcome for Santee Cooper customers and the state.”
The S.C. House likely would support the sale of Santee Cooper. House Speaker Jay Lucas, R-Darlington, has said he is open to selling Santee Cooper if a buyer can lower customers’ power bills.
‘Straw that broke the camel’s back’
The proposal was filed a day after a Senate hearing in which senators grew frustrated that Santee Cooper executives said they could not answer technical questions about their operations, such as how much rates are projected to rise for Santee Cooper’s residential customers to pay off the V.C. Summer debt and how much money the utility has borrowed over the past six months.
“What detail do you have with you?” Senate Minority Leader Nikki Setzler, D-Lexington, asked then. “Everything you ask, you say you don’t have it today.”
A special Senate committee has been studying what to do with Santee Cooper for the past few weeks. The senators spent the past two hearings questioning Santee Cooper executives.
“Yesterday’s testimony helped galvanize folks that were sitting on the fence (about whether to sell Santee Cooper),” state Sen. Mike Fanning, D-Fairfield, told The State. “It was the straw that broke the camel’s back.”
Major power companies and other firms have interest in Santee Cooper. Ten of them anonymously submitted 15 non-binding bids for Santee Cooper, according to ICF, a Virginia-based consultant hired by lawmakers to field and review the offers.
That includes four credible bids to purchase the entire utility, three of which would ensure Santee Cooper’s customers pay no further for V.C. Summer.
The joint resolution, which still must pass the Senate and the House, would give McMaster the power to negotiate with bidders and pursue a sale — almost certainly with the help of a high-powered investment bank. The Department of Administration would seek formal offers for the utility.