Senators punt on Santee Cooper sale, setting up clash with House over utility’s fate
State senators have rejected an offer from a Florida-based energy company to buy Santee Cooper, opting against a deal that promises to resolve the utility’s multi-billion dollar debt and provide nearly $1 billion in ratepayer relief.
Instead of selling the state-owned utility, members of a Senate panel want to reform Santee Cooper, which accumulated $4 billion in debt from a failed nuclear project in Fairfield County.
That decision, approved Thursday by the Senate Finance Committee, now sets up a possible showdown with House members who want to negotiate a better deal with energy giant NextEra, while putting together possible reforms for the 86-year-old public utility if a sale falls through.
NextEra had offered to resolve Santee Cooper’s debt upon a sale, pay the state $500 million and allow the state to keep an additional $500 million expected to remain on the utility’s balance sheet, while also providing $941 million in customer refunds or rate credits.
But senators raised questions about NextEra’s request to get pre-approval for its energy plan through legislative action. NextEra wants lawmakers to approve $2.3 billion in capital expenses in advance, instead of having NextEra bring their plan to state utility regulators for approval.
“They want all kinds of incentives, tax breaks, they want the General Assembly in essence to pass another Base Load Review Act, which sets their rates, their return on equity,” said state Sen. Nikki Setzler, D-Lexington, referring to the state law that allowed utilities to charge customers in advance for the failed nuclear project. “The General Assembly is not qualified to be in that business.”
The debate over the fate of Santee Cooper came about after the utility, as the junior partner to former SCANA, racked up billions in debt before abandoning an effort to build two nuclear reactors at the V.C. Summer generation plant in Fairfield County.
Lawmakers directed the state Department of Administration to seek bids to purchase or manage the utility and vet those offers, while also evaluating the utility’s own plan to improve operations.
Following a House committee earlier this week, the Senate Finance Committee on Thursday rejected all three of the options presented by the Department of Administration, one for NextEra to buy Santee Cooper, one for Virginia-based Dominion to manage the utility, and one for Santee Cooper to institute its own reforms.
On Thursday, House Ways and Means voted 19-3 to go forward with the two parallel paths, one that includes negotiating with NextEra, and one that includes governance reform for Santee Cooper. It’s a move that would create more time for a sale to be negotiated, members say.
NextEra representatives have said they are willing to negotiate a better deal.
“The committee felt it was incumbent upon them for us to do our due diligence and to make sure we know what the best final offer is and make an informed decision,” House Ways and Means Chairman Murrell Smith, R-Sumter, said Thursday.
House members have discussed wanting to have better customer representation on Santee Cooper’s board, while also having the Public Service Commission, a watchdog for non-public utilities in the state, evaluate public Santee Cooper’s plans to expand its energy generation.
“We welcome improved regulation, oversight and changes to board structure and duties,” said Santee Cooper spokeswoman Mollie Gore. “We stand ready to be a resource as needed as legislators continue their discussions.”
From Senate leaders’ perspective on Thursday, reform is the only option as a sale is now off the table.
“I take a different position than the House does. I don’t think you can negotiate with NextEra. I don’t think that was ever contemplated,” Setzler said, referring to the General Assembly resolution that led the three proposals put forward by the DOA.
Despite Thursday’s actions, NextEra remains interested in buying Santee Cooper.
“We have indicated that we are open to negotiation and discussion of all aspects of our proposal,” said company spokeswoman Debbie Larsson. “We look forward to the opportunity to engage in negotiation and continue to work with both chambers of the Legislature to effect a sale offer that will result in the greatest value and certainty for Santee Cooper customers and the state.”
Common ground in reform
Both legislative committees had until March 12 to make a recommendation to their full bodies of how to move forward, and right now the one thing the chambers may be able to agree on is putting in legislative mandated reforms for Santee Cooper.
Setzler, D-Lexington, said lawmakers must look at the how the Santee Cooper board operates when approving and rejecting proposals, while offering more transparency in operations and how they set rates, and the relationship with electric cooperatives, among other things.
“The one thing that cannot occur in my opinion, and I think in the committee’s opinion, is Santee Cooper cannot be allowed to continue to operate the way they operate today without being reformed. It is not in the best interest of the citizens,” said Setzler, who was among the legislators appointed to a finance subcommittee to work on reforms.
However, senators face no deadline for coming up with their own reform plan.
“It’s going to take them time,” said Senate Finance Chairman Hugh Leatherman, R-Florence. “I’ll give them whatever time they need.”
