Santee Cooper debt must be addressed, McMaster says
S.C. lawmakers will seek serious, binding offers from companies interested in purchasing or taking over Santee Cooper after the state-owned utility racked up $4 billion in debt on a failed nuclear plant construction project.
But a final decision on whether to sell or relinquish control of Santee Cooper will be punted for at least another few months, until lawmakers reconvene to consider the best of those offers.
That was the compromise reached Thursday after about 14 hours of debate over six days in the S.C. Senate, and 21 months after Santee Cooper announced it was quitting the near-decade-long construction of two nuclear reactors at the V.C. Summer Nuclear Station in Fairfield County.
The House is likely to accept that proposal. House leaders and GOP Gov. Henry McMaster have said for months the General Assembly should further explore their options surrounding Santee Cooper.
“We’ve got to start the process,” said Senate Majority Leader Shane Massey, R-Edgefield. “We’ve been talking about this for over a year. We need a defined pathway on how we’re going to move forward.”
The failed project represents one of the largest financial debacles in the history of the state. Santee Cooper’s nuclear debt threatens to cost its customers — two million of them in all 46 counties, including electric cooperative customers — thousands of dollars per household in higher power bills over the next four decades.
Lawmakers have grappled all year with how to protect those customers. A sale could potentially pay off Santee Cooper’s debt, ensuring customers aren’t made to pay for a power plant that was never finished.
A management agreement would not do that, but hiring a private firm to run Santee Cooper more efficiently could save money for customers while keeping the utility state owned.
There is interest in Santee Cooper. The state already has received 15 anonymous, non-binding offers to purchase or manage the utility. Of four credible bids to purchase the entire utility, three would have paid off all the V.C. Summer debt, according to a consultant hired by the General Assembly.
But that consultant’s report lacked details that senators said they need before they feel comfortable voting to offload the 85-year-old utility, based in Moncks Corner.
A week before the 2019 S.C. legislative session ends, the Senate on Thursday voted 42-1 to explore those options and come back with more details.
Their proposal asks the state Department of Administration to seek offers from companies who want to buy or manage Santee Cooper.
If the proposal also is OK’d by the House next week, the department would hire financial experts — likely a high-powered investment bank — to evaluate those offers and bring the best ones to the General Assembly to consider, likely later this year.
The bids would be judged based on a host of factors, including:
▪ How the bidder would treat Santee Cooper’s electric rates over the next 20 years
▪ How many of the Santee Cooper’s employees would lose their jobs over the next five years under the agreement
▪ Whether the bidder would keep or eliminate Santee Cooper’s headquarters in Moncks Corner
▪ Whether the bidder would pay off all of Santee Cooper’s debts
▪ Whether the bidder agrees to continue Santee Cooper’s work with the state on economic development recruitment projects
▪ How the bidder plans to generate or import power to serve Santee Cooper’s customers
▪ The total value of the bid
The Administration Department would bring the best purchase offer and the best management offer to the General Assembly to consider. Santee Cooper also would be allowed to submit its own offer, explaining how it would improve itself if allowed to remain a standalone utility.
That would give lawmakers three options to consider when they reconvene to decide Santee Cooper’s fate.
“We’ve crossed a lot of T’s and dotted a lot of I’s,” said Sen. Thomas McElveen, a Sumter Democrat who is skeptical of selling Santee Cooper. “This makes me feel a lot better about the process. … It gives Santee Cooper a chance to save itself.”
Any sale of Santee Cooper will not include lakes Marion and Moultrie, according to the compromise.
Senate Transportation Committee Chairman Larry Grooms, meanwhile, urged lawmakers to reject this proposal and instead spend the rest of the year assessing whether the V.C. Summer construction site could feasibly be completed — a long shot by any measure.
“I don’t believe that that much money was spent for nothing,” Grooms said of the billions wasted on the V.C. Summer expansion project.
Grooms’ Berkeley district includes Santee Cooper’s headquarters, and the Republican is easily the utility’s strongest defender in the General Assembly. He was the only senator to vote against the proposal.
The Senate voted 33-10 to reject his proposal and instead consider other options for Santee Cooper.