WE ALL WANT to pay less for the the nuclear reactors that SCE&G and state-owned Santee Cooper sank $9 billion into before abandoning this summer. But legislators’ efforts to make that happen could easily backfire if lawmakers focus too much on short-term savings or get fixated on ideological goals or populist pandering rather than carefully assessing the potential consequences of their actions.
Their goal must be to reduce the cost to ratepayers as much as possible without going so far that they end up costing us even more in the long run.
We’ve talked a lot lately about the delicate balance legislators have to walk with SCE&G parent SCANA — and how that balance might have become even trickier since Dominion Energy offered to purchase the company under conditions that many legislators understandably find … worrisome.
But finding the balance is no less important — and possibly no less difficult — when it comes to Santee Cooper.
Unlike SCANA, Santee Cooper doesn’t have shareholders who could be called on to shoulder more of the costs, so the only options are to make spending cuts at Santee Cooper, make taxpayers pick up some of the cost and sell some or all of Santee Cooper.
I suspect the first option won’t make a significant dent in the debt. Still, it absolutely needs to be done — starting with executive salaries and special retirement programs. You do not start looking for more revenue until you make reasonable efforts to use what you have as efficiently as possible.
What we need most right now is for our legislators to acknowledge that they don’t have enough information yet.
The second option should be a non-starter. It would be no more fair than making taxpayers pick up some of SCE&G customers’ costs. And if you did one, you’d have to do both. In either case, the result would be that those taxpayers who happen to be Duke Energy customers would be forced to help pay for the SCANA/Santee Cooper failure — which is even less fair than making SCANA/Santee Cooper customers pay.
The third option starts out with a lot of support. Libertarian legislators and special interests are philosophically opposed to the state owning a utility. A lot of utilities would love the opportunity to purchase Santee Cooper, and they’re making their presence felt at the State House. Then there are others who are disgusted with what they call Santee Cooper’s arrogance, and what one Lowcountry business — which is locked in a battle with the utility over electricity rates — considers the abrogation of its duty to assist in economic development. And of course Gov. Henry McMaster has made that his be-all-end-all solution to this mess.
But here’s the thing: We don’t know enough yet to reasonably assess this option. Indeed, what we need most right now is for our legislators to acknowledge that they don’t have enough information yet.
This decision shouldn’t be about whether or not legislators like the idea of a state-owned utility.
This decision shouldn’t be about whether or not legislators like the idea of a state-owned utility. We’re not talking about whether to create a state-owned utility, which certainly wouldn’t happen now; we’re talking about the most pragmatic thing to do about the fact that we have one, and it has too much debt.
It shouldn’t be about whether the Legislature is happy with the way Santee Cooper has operated. If legislators don’t like the utility’s priorities or its secrecy or its arrogance or anything else, they can change the laws. They can clean house, or better still, they can give the governor the power to clean house.
Nor should the decision be about the perks and political favors the utility offers legislators. (I don’t understand what all Santee Cooper does for legislators, but I can tell you that this is a big consideration for a lot of them.)
What matters is the difference between rates if customers have to cover Santee Cooper’s nuclear debt and their rates if they have to buy electricity from a private company that has to cover the debt, and make a profit.
This decision needs to be made based on the numbers. Most important: the difference between rates if customers have to cover Santee Cooper’s nuclear debt — and their rates if they have to buy electricity from a private company that has to cover the debt and make a profit. And not just the difference for five or 10 years; the difference over decades. This is an extremely valuable state asset that must be sold only if it is absolutely clear that it is in the long-term interests of our state, and of Santee Cooper customers, to sell it.
The Legislature and Gov. Henry McMaster need to work together to get the most reliable projections at the most reasonable cost. If they do decide that it makes sense to sell Santee Cooper, it needs to be sold through an open bidding process, rather than just allowing politicians to pick their favorite buyer. And it will be imperative that the contract includes provisions that guarantee those cost projections hold up — for decades.
Lawmakers also need to remember the “some or all” part of this option.
Even if the numbers show that selling Santee Cooper is a bad idea, the time could come when it makes sense to sell the abandoned reactors and/or the licenses to operate them — that is, if Santee Cooper will agree to take them from SCE&G. And I’d be surprised if it weren’t worthwhile right now to sell some of its vast land holdings — including its luxe Wampee Conference Center on Lake Moultrie.
Here are some other pieces I’ve written about this that you might find helpful:
Ms. Scoppe writes editorials and columns for The State. Reach her at email@example.com or (803) 771-8571 or follow her on Twitter or like her on Facebook @CindiScoppe.