Just a month ago, the president of the S.C. Senate announced “the time has come to sell Santee Cooper” and filed a proposal to do just that.
But now, three days into the Senate’s marathon floor debate on Santee Cooper, a milder proposal has taken root: letting another utility or firm take over Santee Cooper’s management, cutting costs and using economies of scale to produce and purchase power cheaper.
The idea is popular among senators who are skeptical a buyer could pay off Santee Cooper’s $8 billion in debt — including $4 billion from its failed V.C. Summer nuclear plant construction project — and still keep power bills low for customers.
It also is the preferred alternative for Santee Cooper’s 1,625 employees, many of whom could lose their jobs if Santee Cooper is sold.
Still, a number of senators remain interested in pursuing the utility’s sale, since a management arrangement would not pay down Santee Cooper’s nuclear debt and save customers thousands of dollars on their power bills over the next four decades.
The General Assembly probably won’t decide Santee Cooper’s fate until a special legislative session later this year, at the earliest.
But in the meantime, the Senate appears close to a compromise that would let the state Department of Administration seek and field serious, binding offers from companies to either purchase or manage Santee Cooper.
Those offers would be presented to the General Assembly, which could then decide whether to sell Santee Cooper, let another firm manage it, or do nothing at all.
“What we’ve done so far is pushing us in a direction where hopefully we’ll be able to get some consensus,” said Senate Majority Leader Shane Massey, R-Edgefield.
Options to consider
Until recently, the debate over Santee Cooper’s future has focused mostly on a possible sale.
That focus crystallized when a consultant hired by lawmakers — Virginia-based ICF — told lawmakers it had received four credible offers to purchase the entire utility, including three that would pay off the V.C. Summer debt and offer lower rates than Santee Cooper.
ICF’s February report fueled supporters of a sale, including GOP Gov. Henry McMaster, who say offloading the utility is the only way to ensure Santee Cooper’s ratepayers — including customers of 20 electric cooperatives that distribute Santee Cooper’s power — aren’t made to pay for the utility’s nuclear mistakes.
But Santee Cooper’s defenders, especially in the Senate, are skeptical an outside company can truly pay off the utility’s $8 billion in total debt — plus $700 million in early bond repayment fees — and still keep power bills low. They have poked holes in ICF’s report, saying the bids in it were non-binding and weren’t fully vetted.
They also worry about how a sale might affect Santee Cooper’s employees and the utility’s economic development efforts.
However, this week, senators heard more about offers to manage the utility. Those offers also were submitted to ICF but not as heavily discussed in the consultant’s report.
‘Not a magical solution’
The management approach was pitched to senators Wednesday by representatives of two companies, Georgia-based Southern Co. and Virginia-based Dominion Energy, that have submitted management offers.
Notably, Southern and Dominion executives told senators they haven’t submitted offers to buy Santee Cooper because they couldn’t find a way to pay off the debt and keep rates low.
And Southern General Counsel Jim Kerr publicly doubted any other company could do it. He encouraged senators to consider keeping Santee Cooper state owned so it can continue to enjoy its tax-exempt status and low borrowing costs. Santee Cooper’s employees and retirees have trekked to the State House in recent weeks to share a similar plea.
“There’s not a magical solution to wipe away this (debt) obligation for customers of Santee,” Kerr said Wednesday. “You didn’t get into this situation quickly. I’m not sure that you’re going to get out of it quickly or easily.”
Skeptics of selling Santee Cooper say they won’t go along with plans to consider selling the utility unless the General Assembly also considers offers for management, which would keep the utility state owned. Senate leaders appear to be OK with that.
Critics also want to make sure any offers to purchase for Santee Cooper come with written promises explaining how those companies would handle Santee Cooper’s electric rates, power supply and employees in the long run as well as the short term.
“Handshakes, winks and nods and backslapping in this business is risky,” said Senate Judiciary Committee Chairman Luke Rankin, who represents both Santee Cooper and employees in Horry County.
With just two weeks and six working days left in 2019 legislative session, the longer the debate goes, the less likely other important bills have a chance to become law this year. That includes proposals that would expand solar energy in South Carolina and offer $115 million in tax breaks if the Carolina Panthers move their headquarters and practice facilities across the N.C. border to Rock Hill.
And senators conceded Wednesday they don’t have enough time left to pass a major education overhaul proposed by the House, despite assuring reporters earlier this year the Santee Cooper debate wouldn’t drown out efforts to fix the failing public education system.