The Greenville News
March 9, 2019
As the saga of SCE&G’s failed nuclear project in Fairfield County became public in early 2017, Upstate South Carolina electric users might not have been paying attention. After all, the Upstate was primarily Duke Energy territory. Why should its utility ratepayers be concerned?
Now nearly two years later, many Upstate residents and businesses understand the financial threat facing them from Santee Cooper’s financial disaster.
Santee Cooper, a state agency that supplies about 60 percent of its electricity to the 20 local electric cooperatives around the state, was a 45 percent partner with SCE&G in the abandoned nuclear project.
That means that every co-op ratepayer in the state owns a majority of the $4 billion construction bond debt of Santee Cooper for this financial debacle. Residential and business co-op customers in all corners of the Palmetto State, are facing significant future rate increases — unless the state legislature acts.
What the General Assembly needs to do is the same thing it did to solve the $5 billion nuclear construction debt that faced SCE&G…agree to a sale.
In the case of SCE&G, Virginia-based Dominion Energy offered to buy the South Carolina private utility. The legislature first instructed the S.C. Public Service Commission (PSC) to order SCE&G to cut its rates by 15 percent to rectify most of the past rate hikes for the nuclear project.
Then, after a three-week hearing, the PSC decided to approve the sale of SCE&G with the condition that Dominion maintain the 15 percent rate reduction. In the process Dominion agreed to absorb about half of the abandoned-construction debt, relieving that responsibility from customers.
As big a decision as the SCE&G solution was for the state, resolving the Santee Cooper financial disaster is even more complicated.
Unlike almost all utilities across the nation, Santee Cooper is a state agency that both generates electricity for our co-ops and sells it directly to nearly 180,000 customers along the coast. It is a valuable state asset.
However, management of the asset has led to some very bad business decisions recently, including getting into the nuclear energy construction business. Santee Cooper tried to build an unnecessary coal plant in the 2000s, until public criticism succeeded in stopping the project. Its board of directors allowed its state-employee CEO to retire with a more than $800,000 annual income package of benefits.
Clearly, we should not let the Santee Cooper Board determine the best path forward for the state and ratepayers. That job is in the hands of the legislature. A joint committee of House and Senate members was organized and through a respected consulting firm received 14 offers to buy the state utility. Four of these were deemed to achieve the objectives set by Gov, (Henry) McMaster and the legislators.
Now, unfortunately, the decision on Santee Cooper appears to have slowed. The Senate has formed a Select Committee on Santee Cooper to review all the options, which might include keeping the utility as a public agency.
But time is of the essence for a decision. Every day it is estimated that $1 million in interest is added to the Santee Cooper $4 billion construction debt. Over the life of those bonds, Santee Cooper and local co-op customers would pay $9 billion in higher rates if nothing changes.
The South Carolina Small Business Chamber of Commerce believes it is important that the cost of the failed nuclear project in Fairfield County not be passed on to the business and residential ratepayers of Santee Cooper and local electric co-ops.
We believe that this is best accomplished by selling Santee Cooper to a well-financed private utility with two conditions: First is the elimination of ratepayer responsibility for the $4 billion nuclear construction debt, plus more than $4 billion of other bond debt. Second is a fast timeline for replacing the utility’s coal plants with renewable and less carbon-polluting generation, which is contributing to our coastal flooding and rising seas.
Selling Santee Cooper is not the goal.
The goals are protecting ratepayers from the combined more than $8 billion of current debt, while also transitioning the utility to renewable, less carbon-polluting generation.
Only by selling Santee Cooper can these goals be met.
Frank Knapp Jr. is president/CEO of the South Carolina Small Business Chamber of Commerce.