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Central Electric Power Cooperative suing Santee Cooper

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Central Electric Power Cooperative is suing Santee Cooper to prevent the state-owned utility from charging South Carolina’s electric cooperatives more for the failed V.C. Summer nuclear project.

Central, a wholesale distributor that provides power to the state's 20 electric cooperatives, approved the action Friday at a board meeting; the company's board of trustees comprises representatives of the co-ops. 

The company said in a news release that it also wants its member co-ops’ share of a payment that Toshiba, parent company of project contractor Westinghouse, made to Santee Cooper after Westinghouse declared bankruptcy.

Central is Santee Cooper’s largest customer, buying around 60% of the power Santee Cooper produces. The co-op distributes power, mostly from Santee Cooper and Duke Energy Carolinas, to the state’s electric co-ops, which cover all 46 counties and serve more than 1.3 million customers. Central is contractually obligated to pay about $2.8 billion of Santee Cooper’s $4 billion in project-related debt but says in the filing that Santee Cooper breached that contract.

The action will be filed as a cross-claim against Santee Cooper in an existing class-action suit seeking damages against Santee Cooper, Central and other defendants.

“We took this action because it’s the right thing to do to protect both our member cooperatives and their consumer members,” Central President and CEO Robert Hochstetler said. “From the beginning, we’ve made the consumers our first priority. They are both our owners and our customers, so we’re going to do what we must to protect their interests in this very difficult situation.”

The claims

The filing consists of three counts. In the first, Central claims Santee Cooper failed to comply with state law regarding duties assigned to it. Santee Cooper has no authority to charge Central for the abandoned nuclear reactors because they are not “used or useful,” and charging for reactors that are not producing power is “unjust and unreasonable,” the filing says.

The second count argues that Santee Cooper has breached a contract known as the Coordination Agreement, which calls for an annual study to determine rates and charges for Central’s power purchases from Santee Cooper for service during a given period.

“Because the abandoned V.C. Summer Units 2 and 3 are not providing and will not provide any service to Central,” the suit argues, “the Coordination Agreement does not permit Santee Cooper to recover costs associated” with the reactors.

The third count says that because Central contractually bears approximately 70% of Santee Cooper’s capital costs, it is entitled to 70% of the $831 million settlement that Toshiba paid to Santee Cooper.

The lawsuit does not change the co-ops’ position that Santee Cooper should be shopped, Michael Couick, president and CEO of the Electric Cooperatives of South Carolina, a trade association for the co-ops, said in the release. The co-ops themselves are mulling an offer for the state utility.

“This does not stop our ongoing efforts to significantly transform Santee Cooper through a formal test of the market,” Couick said. “We’re anxious to work with the General Assembly and all other involved parties to minimize the impact on consumers and Santee Cooper’s employees.”

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