South Carolina’s Republican state Senate may have killed a move to sell the giant state-owned Santee Cooper public power system. The State newspaper reported today that the Senate has pulled the plug on funds flowing to a Virginia consulting company, ICF, which was evaluating bids for the state-wide system that supplies electricity to the state’s rural electric cooperatives.
Santee Cooper was a nearly half owner of the failed V.C. Summer nuclear power construction project, carrying some $8 billion in debt as a result, and passing on costs to its customers in rate increases. Republican Gov. Henry McMaster has been pushing for years to sell Santee Cooper, established in the 1930s by then Democratic Gov. Strom Thurmond to emulate Franklin D. Roosevelt’s New York Power Authority and the Tennessee Valley Authority.
The newspaper obtain an email in which the Senate staff “backed out of a weekly conference call with ICF – the consultant that spent months fielding and evaluating 15 bids for the 84-year-old utility — and said the Senate ‘wants to carefully consider the next steps in this process before committing to expending the large sums that may be necessary.’”
As part of its due diligence in considering bids – Florida’s NextEra Energy made a $8 billion cash offer for the system – the legislature earlier this month set up a committee consisting of members from the House and Senate to look into the bids. It planned the hire of ICF, a well-known energy and economics consulting company.
While there was support for selling the public power system in the House, the newspaper reported that Senate President Harvey Peeler said it is pointless the pay ICF as the Senate lacks the votes to approve a sale. “Their job is done,” he said.
A McMaster spokesman said, “‘This is certainly a disappointing turn of events, but the governor is hopeful that the Senate will reconsider to continue this important process and think only of what is in the best interest of South Carolina’s taxpayers and ratepayers.”
House staffers told the newspaper that their body plans to move forward on their own, hiring ICF or some other economic consultant to study the sale, “even if the Senate won’t help pay the bills.” The state would be unable to sell Santee Cooper without Senate agreement.
A preliminary report from ICF early this month said four bidders have made offers that would wipe out Santee Cooper’s debt. That prompted House Speaker Jay Lucas to tell The State, “The report shows there is a market for Santee Cooper and that there are buyers willing to provide rate relief for customers of Santee Cooper and the electric cooperatives. If that proves to be the best option for ratepayers, I will pursue a sale.”
Early this week, the feisty and reliable statewide blog FITSNews reported on another idea that is floating in Columbia: a public offering of Santee Cooper. FITSNews has long supported privatizing Santee Cooper.
The blog said, “According to sources familiar with the latest negotiations, there have been discussions within the S.C. General Assembly regarding a possible initial public offering (IPO) for this debt-addled “asset” – which provides power to hundreds of thousands of South Carolinians directly and through a network of electric cooperatives. It is not exactly clear how a contemplated IPO would be organized – or how much money would have to be fetched in order to make it practicable – but the concept has reportedly intrigued legislators on both sides of the debate over selling the utility.
“‘I’d be fine with that,’ one state senator following this issue closely told us, adding that if an IPO were successfully organized Santee Cooper would ‘become someone’s subsidiary within two years.’”
— Kennedy Maize