Santee Cooper is spending more than ever on a pair of new executives to turn around the state-owned utility that lost $4 billion of its customers’ money on a failed nuclear power plant construction project.
And, minutes after being hired, new CEO Mark Bonsall described the legislative push to sell Santee Cooper as a “suboptimal and uninformed solution,” vowing to find ways to reform the agency from within.
The state agency’s board on Tuesday approved paying Bonsall, a 66-year-old retired public power utility executive from Arizona, at least $1.65 million over the next 18 months, plus at least $250,000 in bonus pay for meeting a series of goals that the board hasn’t set yet.
Santee Cooper also hired one of Bonsall’s former deputies at the Tempe-based Salt River Project as a senior executive to develop the utility’s long-term strategy. Charlie Duckworth will be paid at least $840,000 over the next 18 months, plus at least $165,000 in possible bonus pay.
The move appears to be an effort to save the embattled utility from being sold — an option state lawmakers are exploring at the behest of S.C. Gov. Henry McMaster.
Each of the new executives will make more money than any other top executive in the agency’s 85-year history.
Longtime Santee Cooper CEO Lonnie Carter earned nearly $541,000 a year before retiring in August 2017, a month after the V.C. Summer expansion project went belly up. Bonsall’s immediate predecessor, interim CEO Jim Brogdon, earned nearly $374,000 a year before his tenure ended Tuesday.
“We believe that it is appropriate,” Santee Cooper board chairman Dan Ray said before the board’s unanimous vote. “Mark Bonsall has not only 41 years of experience with public power utilities at Salt River Project, but (a utility) that is bigger than Santee Cooper. … Mark has been a senior executive at Salt River Project for over 30 years.”
Ray said Bonsall’s pay is “consistent with” his previous salary at the Salt River Project, a water and electric utility that Bonsall led for seven years as CEO before he retired in May 2018.
Bonsall takes over Santee Cooper at a time of unprecedented turmoil. The utility faces having to raise rates to cover the nuclear debt, and state lawmakers are considering selling the utility as a means of paying off the debt and avoiding rate hikes on the 2 million South Carolinians who rely on Santee Cooper’s power.
Absent major changes, the typical Santee Cooper residential customer will have to pay roughly $6,200 for the failed project over the next four decades. Customers of the 20 electric cooperatives who buy three-fifths of Santee Cooper’s power must pay about $4,200 over that span.
After the board meeting, in his first interview with S.C. reporters, Bonsall said he and Duckworth will develop a new strategy for Santee Cooper’s future after examining the agency’s fleet of power plants, organizational structure and rates. Internal reform is preferable to offloading the utility, he said.
“Santee Cooper has tremendous value to the state of South Carolina and to its customers,” Bonsall said. “Clearly, there is an issue with the cancellation of the nuclear units. But throwing out the baby with the bathwater is a suboptimal and uninformed solution. I would prefer to be given the opportunity to put the pieces together and to craft a new optimal future for Santee Cooper.”
Bonsall said he would work to repair Santee Cooper’s relationships with state lawmakers who were blindsided by the V.C. Summer project’s collapse.
He also hopes to mend the utility’s bond with its largest customer — the collection of 20 electric cooperatives who buy and distribute Santee Cooper’s power to customers in all 46 counties, but don’t want to pay any further for the unfinished power plant. The co-ops have sued Santee Cooper to prevent those higher charges.
Bonsall strongly hinted that he is interested in reducing Santee Cooper’s reliance on coal-fired power plants amid criticism that the utility has not embraced cleaner alternatives such as solar power and natural gas. He noted his decision as Salt River Project’s CEO to shut down the coal-fired Navajo Generating Station near Page, Arizona.
“The whims that have been shaping the industry … have indicated you can be leaner and greener at the same time and not apologize for it and not have to be financially masochistic with your customers,” Bonsall said.
Bonsall said he would make no promises about how many employees could be laid off as he works to make the agency more efficient.
Bonsall will make $1.1 million per year — plus the $250,000 in possible bonuses — for the 18-month contract. Santee Cooper has the option to extend his contract by six months, if it wants.
Bonsall also will receive $40,000 to move to South Carolina and a car allowance of $1,045 per month.
Duckworth will be paid $560,000 a year, plus at least $165,000 in possible bonus pay.