The nuclear construction fiasco at South Carolina’s cancelled V.C. Summer nuclear units continues. The state could easily end up with both of its large electric utilities in the hands of outsiders.
While much of the attention has been on the vultures circling over the corpse of Summer’s half-owner, investor-owned utility SCANA Corp., the giant state-owned generating utility Santee Cooper (formally the South Carolina Public Service Authority) is now drawing takeover attention.
Florida-based NextEra Energy, which was pondering a bid for SCANA, concluded that it could not match the $14 billion offer from Virginia’s Dominion. So NextEra is laying the foundation for a move to buy Santee Cooper from the state. Columbia’s The State newspaper reports that NextEra has been lobbying lawmakers privately, floating an offer of $10 billion. Governor Henry McMaster has said repeatedly that he’s open to selling the state power system.
The Post and Courier also reported NextEra’s maneuvers, adding Pacolet Milliken of Greenville, S.C., to the mix. That company is owned by elements of the Milliken textile and chemical interests, which holds some hydro and landfill gas assets, and is said to be working with Twenty First Century Utilities, a utility investment company based in Washington, D.C. Last month, Pacolet Milliken denied it has an interest in buying Santee Cooper.
Moody’s Investors Service last month took a detailed look at the implications of a sale of Santee Cooper to private investors. Moody’s said, “Santee Cooper’s existing low cost structure could make privatization challenging. Privatizing through a sale, for example, would likely lead to a higher cost capital structure to replace Santee Cooper’s $7.7 billion of tax-exempt revenue bonds, which over time could increase electric rates.” Santee Cooper’s residential rate is 11.62 cents/kWh, compared to SCANA’s SCE&G rate of 14.56 cents/kWh.
Moody’s added that privatizations of municipal electric systems “have not had a successful track record. Key reasons include public power electric utilities’ lower capital cost, their lack of a profit margin, the fact that they are considered more customer-focused and rate-sensitive, and a sale approval process that would be subject to full public disclosure.”
As is the case with SCANA, they key issue for Santee Cooper is how to deal with the rate increases that resulted from the Summer misadventure. The state’s electric cooperatives, through Central Electric Power Cooperative, which buys Santee Cooper power for the state’s 20 co-ops, have approved suing Santee Cooper. Central, Santee Cooper’s largest customer, is on the hook for about $2.8 billion of the $4 billion in debt the state utility ran up during the Summer construction.
Central argues that it should not have to pay any costs beyond those incurred before the two-unit, 2,000-MW project went under. The cooperative, which has paid 70% of Santee Cooper’s construction cost, also wants 70% of the $831 million settlement that Santee Cooper got as part of the Westinghouse bankruptcy last March.
Santee Cooper was created in 1934, a power and water agency modeled on Franklin Roosevelt’s Tennessee Valley Authority, by then-progressive Democratic Gov. Strom Thurmond. According to the American Public Power Association, Santee Cooper has 3,650 MW of coal-fired generating capacity, 1,102 MW of gas, and 343 MW in nuclear (its share of the two operating Summer reactors).
Long-time Santee Cooper CEO Lonnie Carter announced his retirement last year, just weeks after the Summer project cratered.
— Kennedy Maize