“The time has come to sell Santee Cooper.” That statement by South Carolina Senate President Harvey Peeler, and a joint Senate-House resolution he introduced on Wednesday to give Gov. Henry McMaster authority to unload the 85-year-old state-owned generation and transmission system, presumably to a private investor, have revived what appeared to be dead a month ago.
Progressive Democratic Gov. Strom Thurmond established Santee Cooper in 1934 to emulate Franklin D. Roosevelt’s New York Power Authority and his Tennessee Valley Authority.
The once proud and strong public power system has faced an existential crisis (using the word “existential” properly) as a result of its nearly half ownership of the failed two-unit V.C. Summer nuclear project. The nuclear fiasco has already claimed the life of the former investor-owned SCANA Corp., now a division of Virginia-based Dominion Energy.
It now appears clear that building a new nuclear generating plant in the U.S. is both a bet-the-company proposition, and a likely loser. A similar Southern Co. project in Georgia, the two-unit Vogtle plant, may be getting an additional $3.7 billion federal loan, on top of the $8.3 billion federal subsidy already in place, bringing the taxpayer exposure to $12 billion, for a project that is billions of dollars over budget and years behind schedule.
South Carolina’s ill-fated venture into new nuclear construction has added $4 billion to Santee Cooper’s existing $4 billion in debt, potentially burdening its many customers, supplied through the state’s rural electric cooperative distribution utilities, with heavy rate increases. McMaster, a Republican, has been pressing to unload the public power system for two years. But the state legislature, controlled by Republicans, has so far resisted.
Peeler’s move could unblock the stalemate. He said, “For almost two years, Santee Cooper has been looming over us. Their leadership is in crisis. They are crippled by debt, and it is clear to me that Santee Cooper cannot see their own way that works for out ratepayers and taxpayers of the state.”
Peeler’s bill would shift the decision on Santee Cooper’s fate from the legislature to the governor. The State newspaper commented that the legislation is “a rare instance in which legislators willingly give up power.”
McMaster praised Peeler, saying that his introduction of the legislation “is showing clear and decisive leadership in response to a thoughtful, deliberate, and ongoing process to determine the value of Santee Cooper and the best way to protect South Carolina’s ratepayers and taxpayers.”
It is far from a done deal. Republican Sen. Larry Grooms, whose district includes Santee Cooper’s headquarters in Moncks Corner, said he will filibuster the legislation. “There needs to be a debate at some point, and I do hope we have a debate. I’ll do anything and everything I can to prevent harm to the ratepayers.”
The state Senate appears to be the major field of battle. The State reported that the joint resolution, if it gets to the state House, is “expected to pass.”
Ten potential buyers for the nation’s fourth largest public power system in terms of generating capacity have emerged, but have submitted anonymous bids to the Virginia consulting company ICF that the legislature hired to receive offers. One reportedly came from Florida’s NextEra Energy for $8 billion in cash.
Peeler’s move to sell Santee Cooper drew praise from the feisty, fiscally-conservative state-wide blog Fitsnews. The blog commented, “The time to sell Santee Cooper was more than a decade ago – when we first proposed it. Had lawmakers listened to us then, they could have netted taxpayers billions of dollars. As it stands now, the state will be lucky to make back what it owes on this monument to failed central planning.”
Fitsnews added that a particular problem with the Santee Cooper project, for both the public power system and the investor-owned utility, was “accomplished via the now-notorious ‘Base Load Review Act,’ a piece of special interest legislation approved by the state’s Republican-controlled legislature in 2007.” That law allowed the utilities to pass on costs in rates as they were incurred, rather than when the plant was up and running, a common feature of utility regulation in the South, including in Georgia with the Vogtle project.
At the same time the fate of Santee Cooper was in doubt, the South Carolina House easily passed a bill (104-6) to increase state oversight of the Palmetto State’s rural electric cooperatives, which sell Santee Cooper power to retail customers. The State newspaper had uncovered a scandal in the governance of the Tri-County Electric Co-op, where the part-time board members had enriched themselves at the expense of their customer-owners. The newspaper reported that its investigation “brought new scrutiny to the little known and scantly regulated world of electric co-ops, where part-time boards have enjoyed high pay and expensive perks paid by unwitting customers.”
A Democratic lawmaker who represents some of the customers of Tri-County has filed an identical bill in the Senate, which will now take up both the House bill and the Senate proposal.
— Kennedy Maize