Cindi Ross Scoppe

Could Santee Cooper do any more to hurt South Carolina if it tried?

Workers at the Mount Holly aluminum plant in Goose Creek are led in prayer by then-US Rep Tim Scott, who asked that the manufacturer reach an agreement with Santee Cooper for better power rates. Six years later, the company says the rates are forcing it out of business.
Workers at the Mount Holly aluminum plant in Goose Creek are led in prayer by then-US Rep Tim Scott, who asked that the manufacturer reach an agreement with Santee Cooper for better power rates. Six years later, the company says the rates are forcing it out of business. AP

SCE&G is rightfully dominating the news.

Its problems clearly are a concern for its customers and legislators: the nuclear plant debacle with its $4.5 billion debt hanging over ratepayers, management hiding damning information from regulators, rates much higher than other parts of the country jeopardizing economic growth, the utility up for sale.

But South Carolina has another utility that that has equally troubling headline-worthy problems and has tens of thousands of customers either directly or via the electric cooperatives. And it is literally South Carolina’s utility: Santee Cooper.

Santee Cooper is a state agency, but that hasn’t prevented it from making bad business decisions without being held accountable. For years.

The S.C. Public Service Commission is responsible for approving the business decisions proposed by SCE&G for the delivery of energy to its customers. As suspect as this oversight has proven to be over the past 10 plus years, at least the PSC had a loose reign on the utility’s actions.

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Frank Knapp

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Santee Cooper’s board of directors has no such oversight. It is essentially free to make any boneheaded business decision it wants to make.

Turn the clock back to 2007. Santee Cooper had already made the decision to partner with SCE&G to build two nuclear plants. But the public utility was convinced that it also needed to build a coal-fired power plant to take care of its energy needs until the nuclear plants came online. The coal plant was to cost well over $1 billion. With a “B.”

The objections from my organization and others were loud and clear. This was a very bad business decision by Santee Cooper. There were less expensive, less polluting and less long-term-debt alternatives, including buying electricity on the open market (something ratepayers can’t do).

However, Santee Cooper ignored the good business advice, and since it had no regulatory oversight, it spent about $250 million of its customers’ money on the project. Then in 2009 the utility decided that the critics were correct and pulled the plug. But it didn’t quickly unload all the coal-plant equipment it had already bought; instead, it’s still warehousing that now low-demand equipment, at a cost of $13 million a year.

Santee Cooper’s decision to become the minority partner in SCE&G’s nuclear project clearly turned out to be a bad business decision. The public utility ceded management of the project to the private utility. Thus, whatever cost overruns SCE&G got approved by the PSC also meant that unsuspecting Santee Cooper ratepayers were also saddled with increased costs.

Santee Cooper compounded this bad business venture with decisions to hide critical information from authorities, which allowed billions more to be spent on the now-abandoned nuclear project — billions for which Santee Cooper and electric cooperative customers are now on the hook.

Obviously, these bad business decisions have impaired Santee Cooper’s mission, which includes “being a leader in economic development,” because each one increased the electricity rates of its business customers.

But that’s not the only way Santee Cooper is failing to meet tits economic development mission.

The Mount Holly aluminum manufacturing plant in Goose Creek once employed 600 well-paid workers. But Mount Holly let half of its employees go two years ago because Santee Cooper decided not to allow the company to buy 100 percent of its electricity less expensively on the open market.

Santee Cooper did allow Mount Holly to purchase 75 percent of its energy from cheaper sources, as long as the company also paid the utility $16 million a year for fixed costs. Now, though, Mount Holly says the plant will not be viable going forward unless it can completely get out from under Santee Cooper’s rates.

To enable this to happen, the company says it has made an offer that would make Santee Cooper whole without having to raise rates on other customers. It also promised to return its workforce to 600, which would provide up to a $1 billion boost to the local economy.

Santee Cooper’s response has been in line with its other bad business decisions: It has rejected the offer.

Mr. Knapp is the president and CEO of the S.C. Small Business Chamber of Commerce; contact him at fknapp@scsbc.org.

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