Why Santee Cooper is on the chopping block
South Carolina will pay four consultants millions of dollars over the next year to explore offloading or overhauling Santee Cooper.
State lawmakers are considering selling, reforming or allowing another firm to manage the state-owned power company after it lost $4 billion on the failed expansion of the V.C. Summer nuclear power plant in Fairfield County.
The expertise needed for such a multibillion-dollar transaction isn’t cheap.
The state Department of Administration recently hired an investment bank, law firm and two energy consultants as it works to solicit, field and evaluate offers for Santee Cooper. The agency has $20 million to spend on the consultants, including $15 million from Santee Cooper itself.
Moelis and Co., the investment bank, will be paid at least $5 million to analyze Santee Cooper’s assets, identify and contact potential bidders, market the utility to those bidders, grade the bids and select the three best offers for the General Assembly to consider, according to a contract released to The State in response to an open-records request.
Moelis — a firm Gov. Henry McMaster unsuccessfully urged lawmakers to hire to sell Santee Cooper two years ago — will earn $500,000 up front, plus $250,000 a month for at least six months.
The New York City-based firm will continue to earn that monthly fee if it stays on past six months. The $5 million includes $3 million in fees for completing certain tasks. Moelis will be paid:
▪ $1 million for making marketing materials describing Santee Cooper to potential bidders,
▪ $1 million when the bids for Santee Cooper come in, and
▪ $1 million when Moelis delivers its report on the bids to the Administration Department.
Moelis also will get reimbursement from the state for expenses — such as air travel, lodging and meals — it racks up while meeting with bidders.
The Administration Department has agreed to pay a law firm — Los Angeles-based Gibson, Dunn and Crutcher — up to $6 million in fees for legal help with the bids and possible transaction.
As an act of good faith, the contract states, the firm will defer 10% of its total fees until the General Assembly decides what to do with Santee Cooper. Gibson, Dunn and Crutcher will accept that amount only if lawmakers decide to sell the utility.
San Francisco-based Energy and Environmental Economics will get up to $1.48 million over the next year to consult with the Administration Department on energy-related matters, according to its contract.
And Maryland-based attorney Scott Hempling will be paid $345 an hour to advise the agency on energy policy and law, help the agency develop its request for bids and develop criteria to grade them and explain and interpret technical utility issues.
Hempling also was brought on to help the Administration Department hire the three other consultants.