GUEST OPINION: Mount Holly hangs on failed integrity of Santee Cooper

The Berkeley Independent
The Summerville Journal Scene
Goose Creek Gazette
Lexington County Chronicle

March 7, 2018

By Frank Knapp Jr.

All South Carolinians should know by now what I and the South Carolina Small Business Chamber learned over 10 years ago about SCE&G and Santee Cooper.  You can’t accept anything either tells you as the truth.

Our experience with SCE&G goes back to 2002, the first time either I or the Small Business Chamber intervened in a Public Service Commission case on the utility’s request for a rate hike.

SCE&G’s request for more money was always the same. The company says that it simply had to charge higher rates to the customer or it would be in financial danger.  Then the company was required to produce data to justify its proposed rate hike.

The conclusion by the regulators was always the same. SCE&G did not deserve the rate hike they want, and the company always settled for something far less.  The financial disaster never materialized, and SCANA shareholders got millions in the next quarter.

Our experience with Santee Cooper is similar but because they are a state agency and not regulated by the Public Service Commission, the scenarios are different.

There was the over $1 billion for a new, must-have coal-fired plant Santee Cooper proposed in 2007 saying the energy was needed for its customers. The Small Business Chamber and others fought this proposal and after two years Santee Cooper changed its mind but not before spending $250 million on engineering and equipment for the abandoned project.  Since then Santee Cooper has spent about $104 million to store the purchased equipment they bought for the plant ($13 million a year on-going).

Then there is Santee Cooper’s decision to join SCE&G in building two nuclear reactors and allowing SCE&G to make all the management decisions even though the public agency was on the hook for 45% of the cost.

Then came Santee Cooper’s complicity in hiding vital information from public officials about the nuclear construction problems. Had the officials known, SCE&G might not have gotten approval for cost overruns for the plants and saved Santee Cooper customers possibly billions.

And while we don’t know when Santee Cooper decided to give their top executives golden parachute retirement plans, we do know that its retired CEO, Lonnie Carter, is being paid about $800,000 a year. That is Carter’s reward for creating the nuclear financial disaster we have today.

Now Santee Cooper is threatening its local three-county area economy with another bad management decision. Many small businesses benefit from the Mt. Holly aluminum plant in Goose Creek.  But the days of that plant and its 300 well-paid workers are numbered if Santee Cooper doesn’t allow the company to go to the open market for less expensive electricity for 100% of its energy needs.

The plant already gets 75% of its electricity cheaper on the open market but Santee Cooper forces it to buy the rest from it at much higher rates plus pay an additional $16 million for use of the transmission lines.

That contract ends this year and Mt. Holly says that it can no longer afford to buy even 25% of its electricity from Santee Cooper and keep the doors open. But the plant’s parent company, Century Aluminum, is willing to continue to pay Santee Cooper the $16 million a year for the transmission lines.

Santee Cooper is refusing the deal and any negotiations claiming it is protecting the rates of its customers. The utility’s spokeswoman is quoted as saying, “If Century’s terms were fair, Santee Cooper would embrace them.”

Mt. Holly’s economic contribution to the area is up to $1 billion dollars. Small businesses benefit either from direct purchases by the plant or plant employees spending money with them.

Losing Mr. Holly would be an economic disaster particularly for Berkeley County.

Santee Cooper needs to say what it needs to let Mt. Holly go and keep ratepayers whole.

Simply saying that the offer is unfair to its other customers doesn’t cut it. The utility’s past bad management decisions give its claim to be concerned about it customers no credibility.

Santee Cooper simply can’t be trusted to make the right decision.

Mr. Knapp is the president and CEO of the South Carolina Small Business Chamber of Commerce.

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