Opinion: Sell Santee Cooper for ratepayer relief

Opinion: Sell Santee Cooper for ratepayer relief

Post & Courier
March 2, 2019


The South Carolina General Assembly took decisive action last year to help SCE&G ratepayers who were facing $5 billion in debt for the construction of the failed nuclear project in Fairfield County. The Legislature instructed the Public Service Commission to reduce customer rates by 15 percent and the South Carolina House supported the sale of SCE&G to the better financed Dominion Energy.

By order of the Public Service Commission, the state approved the sale of SCE&G to Dominion Energy with the conditions that the nuclear debt for customers would be cut by half and the 15 percent rate cut would remain in place.

Now the Legislature has turned its attention to another utility in financial crisis.

This time it is state-owned Santee Cooper, which owes $4 billion in construction bond debt due to the same nuclear debacle that resulted in the sale of SCE&G. The debt on these bonds is growing by $1 million a day and will have to be paid by Santee Cooper’s direct customers as well as every ratepayer who gets power from the Berkeley Electric Cooperative and the 19 other local electric co-ops around the state.

The state of South Carolina has the same two options it had with resolving the SCE&G financial crisis.

Don’t approve the sale of Santee Cooper and thus force it to try to restructure and end up having an undercapitalized state-owned utility that will be hard-pressed to address the future needs of improving service.

Or the state can approve the sale of Santee Cooper if doing so would eliminate much, if not all, of the debt on ratepayers and have a financially sound utility for future service needs.
Just like SCE&G, there are other private utilities that have made offers to purchase Santee Cooper to address these issues.

The South Carolina Small Business Chamber of Commerce, which has successfully worked to keep SCE&G rates as low as possible since 2002, believes that the sale of Santee Cooper is the right business decision for the state to benefit all the utility’s business and residential ratepayers.

However, two goals must be achieved with the sale.

First, the sale should be approved by the Legislature only if the sale eliminates ratepayer responsibility for the $4 billion of nuclear construction debt. Over the life of those existing bonds, Santee Cooper and local co-op customers would pay $9 billion in higher rates.

Some argue that it would be impossible for a private utility buying Santee Cooper to eliminate that $4 billion in debt and lower customer rates. Therefore, they conclude that the state shouldn’t approve its sale.

But Dominion Energy removed $2.3 billion of nuclear debt from SCE&G customers and agreed to lower rates by 15 percent. The state made these outcomes a condition of the sale. Santee Cooper and the state’s electric co-op customers deserve the same support of the Legislature to sell Santee Cooper to a private utility to eliminate the nuclear debt from its direct and co-op ratepayers.

The second goal that must be part of a Santee Cooper sale is a guaranteed, fast timeline for replacing the utility’s coal plants with renewable and less carbon-polluting generation.
Retiring the coal plants, which are costly to operate, with more cost-effective solar and new-generation natural gas plants will help stabilize rates if not lower them. It would also help cut the utility’s carbon pollution, which contributes to climate change, rising sea levels and flooding — serious threats to Charleston and our entire coast.

Selling Santee Cooper is not our goal. The elimination of the $4 billion nuclear debt and, hopefully, also more than $4 billion of other bond debt, and transitioning the utility to cleaner renewable generation are the goals we believe can only be achieved by selling Santee Cooper.

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