This story was originally published on Statehouse Report.
Years of work, more than $14 million spent and where are state lawmakers on whether to sell Santee Cooper? Right back at the drawing board.
Gov. Henry McMaster captured the general feeling of many taxpayers and lawmakers toward the state-owned utility in his Wednesday State of the State address
“There is no state agency in more need of reform or dissolution than Santee Cooper,” he said. “This rogue agency and its leadership have displayed arrogance and contempt for state law and the truth.
“Their incompetence helped create the largest nuclear power fiasco in modern times. They have saddled their customers with billions of dollars in debt and have ignored the authority of our constitutional officers and this General Assembly, creating a toxic environment inside this Statehouse. … The time has long passed for the resolution of Santee Cooper’s fate.”
Background leading to 2021
It’s been four years since the public learned the “rogue agency,” along with SCE&G and parent company SCANA, bungled a $9 billion nuclear reactor project and left the state with a $4 billion problem. Efforts by lawmakers to hold Santee Cooper accountable so far have failed.
Last February, lawmakers were presented with three options for the state-backed utility: Reform it from within and keep it a state-owned utility, contract its management to Dominion Energy, or sell it outright to preferred buyer NextEra Energy. To get to these options cost more than $14 million to taxpayers after the state Department of Administration (DOA) oversaw a proposal process, vetted the bidders and the reform plan, and presented final recommendations.
In a report to lawmakers, the DOA chronicled its work: “Between May 29, 2019, and February 4, 2020, the Department participated in or facilitated more than 350 telephone conferences and in-person meetings. … These included due diligence meetings, negotiations, informational meetings, planning meetings, and discussions and deliberations.”
In other words, it took an extraordinary amount of time, work and money to reach the outcome they presented to the legislature for consideration.
Regardless of that effort, unsatisfied lawmakers scrapped all three options during the first week of March. The House Ways and Means Committee said it would put forth a bill to reform the utility and create a committee of senators and representatives to negotiate a new sale. The Senate Finance Committee said it would pursue a bill so lawmakers could reform Santee Cooper themselves.
Then COVID-19 hit and lawmakers were forced to table the Santee Cooper problem until the 2021 legislative session, but not before they put restrictions on Santee Cooper in a May budget bill to prevent the agency from doing anything that would jeopardize a future sale.
Choppy waters
For its part, Santee Cooper might be living up to its rogue agency billing, depending on which lawmaker you speak to and what side of the debate they line up on.
- In its February report, the DOA contended that Santee Cooper “delayed and impeded the bidding process” and caused at least two months worth of delays at significant cost.
- In July, the agency settled a class action lawsuit from ratepayers for $520 million after arguing that it had the right to raise rates to pay for the nuclear project, regardless of negligence.
- In October, the agency then issued bonds for $638.2 million that would refund $569.6 million of existing debt at lower interest rates and provide an additional $100 million in debt to use toward capital projects.
That extra $100 million debt caused an uproar. Senate Finance Committee Chairman Hugh Leatherman, R-Florence, called for the agency’s chairman of the board to resign in a Nov. 12 interview with The Post and Courier. Sumter GOP Rep. Murrell Smith, chair of the House Ways and Means Committee, held a December meeting of the Santee Cooper Ad Hoc Committee and interrogated the utility’s representatives on why they took on an additional $100 million debt. He also noted his disappointment that agency CEO Mark Bonsall skipped the meeting because he was on vacation.
“When state agency heads don’t appear in committee meetings and their staff misleads, misrepresents, and insults our staff, there’s no win here,” he said in the meeting. “I don’t feel like we’re getting factually accurate information and that we’re being dismissed.”
S.C. Sen. Chip Campsen, R-Charleston, who sits on the Senate Finance subcommittee on Santee Cooper, defended the debt restructuring and the utility’s “exceptional leadership” in a Dec. 30 op-ed that ran in The Post and Courier, writing, “The debt restructuring benefits Santee Cooper and its ratepayers in the form of lower costs and rates. It makes Santee Cooper more profitable, and consequently more valuable. It creates no friction for a sale.”
Whether the new debt breaks the edict for Santee Cooper to not do anything to impede a future sale is now part of the debate that’s being waged at the Statehouse about its future.
Santee Cooper spokesperson Mollie Gore said the agency has been adhering to the law and implementing reforms.
“Santee Cooper’s focus remains what it has been for the last year, which is executing some of the plans around a new resource mix and improving our financial position, so that whatever the outcome is, we’ve increased our value to the state,” she told Statehouse Report.
She added the agency is committed to keeping lawmakers, stakeholders and taxpayers informed on how it is “paying down debts and creating a leaner and greener resource mix.”
This week’s activity
In the first week of session, the House Ways and Means Committee passed a bill to create a new committee of three senators and three representatives to revisit a sale. At the start of the meeting, Smith said the goal of the committee is to “test the market and determine whether there are any interested buyers.”
House Bill 3194 included an amendment that would do away with NextEra as the preferred buyer and open it up to other suitors. The bill also includes a provision for reforming Santee Cooper, which Smith referred to in the meeting as the “back-up plan.” The bill will be considered by the House before moving to the Senate.
In the Senate, two committees addressed the Santee Cooper issue. The Judiciary Committee requested that NextEra provide exhaustive information related to their bid to buy the agency in an effort to vet their proposed deal. Committee members were particularly concerned about how NextEra conducted itself in a deal to buy the Jacksonville city-owned utility JEA, a process that resulted in a Jacksonville City Council investigation into a “lack of transparency.”
Meanwhile, the Senate Finance subcommittee on Santee Cooper was briefed on recent developments and concluded that it needed to gather as much information at the next meeting so, as Santee Cooper supporter Sen. Larry Grooms of Berkeley County said, they could “move forward and make quick recommendations.”
What those recommendations will be are yet to be determined. While some lawmakers remain neutral going in, others are lining up on the pro-sale and pro-reform sides.
The ability to make a speedy decision could also be an obstacle with the COVID-19 crisis continuing and the national political climate. The Senate and House also have announced plans to close next week due to threats of armed protests at state capitol buildings during the presidential inauguration.
Stephanie Barna, former editor of the Charleston City Paper, is a freelance writer from Charleston. Have a comment? Send to: feedback@charlestoncitypaper.com.
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