Talks of a sale of public utility Santee Cooper heated up Wednesday before the V.C. Summer Nuclear Project Review Committee.
Retiring Santee Cooper CEO Lonnie Carter gave a presentation to a group of state senators outlining the company's assets and liabilities in hopes of showing its worth to the committee.
The morning’s top discussion concerned the debt of the company and how that debt was incurred. Carter told the committee 80% of Santee Cooper’s balance sheet was taken up by debt – $4.3 billion related to the failed nuclear reactor project.
Sen. Shane Massey, R-Edgefield, committee co-chairman, said that debt could be the biggest hindrance in a possible sale of the public utility.
“I think we need to focus on the customer,” Massey told a group of reporters during a break in the session. “We’ve seen poor management decisions that have caused this debt and the customers are on the hook. I don’t know how to give them relief other than to force a sale of Santee Cooper.”
Massey echoed the contents of a letter informing S.C. Gov. Henry McMaster of the Legislature's plan to hire an outside consultant to determine Santee Cooper's value in the event of a sale. The letter, sent Wednesday by House Speaker Jay Lucas and Senate President Pro Tem Hugh Leatherman, said it must be determined if selling the utility is in the state's best interest.
Carter warned the committee of possible roadblocks of a sale, including dealing with the company’s bond holders. Carter said bonds would need to be called in before a sale could happen.
“Bond holders will be concerned with anything that is done to impact its revenue system,” Carter said. “The state has pledged not to hinder Santee Cooper from adjusting rates to recoup its revenue.”
Carter estimated the cost to call in the debt at $1.5 billion.
Santee Cooper has raised ratepayer rates five times since 2009. Sen. Mike Fanning, D-Fairfield, said the current process gives protection to Santee Cooper and the state, but not the ratepayer.
“Santee Cooper didn’t look out for the ratepayer any better than the private company,” Fanning said. “I’m questioning the process of how we got here rather than Santee Cooper.”
The Senate committee, formed in August, is probing the demise of the nuclear reactor project near Jenkinsville. Co-project owners Santee Cooper and SCANA subsidiary S.C. Electric and Gas spent nearly $9 billion on the two 1,117-megawatt nuclear reactions before the project collapsed after contractor Westinghouse filed for Chapter 11 bankruptcy protection in April.
Santee Cooper owns 45% and SCE&G 55% of the project. The state-owned utility has a growing base of customers that buy power directly from the company as well as a long-term contract with 20 electric cooperatives with more than 764,000 customers.
McMaster has made finding a buyer for Santee Cooper a priority. His office has received letters of interest from four unnamed Fortune 500 would-be buyers, and on Monday, an unnamed out-of-state utility submitted a proposal, The State newspaper reported.
Dominion Energy is the lead developer of the Atlantic Coast Pipeline, a natural gas conduit slated to pass through Virginia, West Virginia and North Carolina. Dan Weekley, Dominion’s vice president and general manager of Southern pipeline operations, said last month that “everybody knows” the pipeline is not going to stop in North Carolina, fueling speculation about an expansion into South Carolina.
Santee Cooper maintains that keeping the utility in S.C. hands is the best option for power customers.
“We believe any objective analysis will demonstrate Santee Cooper’s continued value to South Carolina as a public power utility,” Santee Cooper spokeswoman Mollie Gore said in an email last week.
The Office of Regulatory Staff, the state’s utility watchdog, has filed a rate relief request for SCE&G customers with the S.C. Public Service Commission, asking that all rate increases related to the V.C. Summer project be suspended and calling for refund credits should the controversial Base Load Review Act that allowed the utility to charge customers for the unfinished reactors be overturned. SCANA has said it will “vigorously contest” that request.
Wednesday’s hearing was the latest in a round of Statehouse meetings as legislators seek answers about the demise of the project. Previous hearings have involved SCANA and SCE&G executives, members of the Public Service Commission and SCE&G ratepayers.
Carter appeared before the House Utility Ratepayers Protection Committee on Oct. 3, telling legislators that he felt Westinghouse misled Santee Cooper.
“I’m very embarrassed by that,” Carter said, though he characterized the project as an investment that could still be completed.
None of Santee Cooper’s potential buyers have committed to finishing the project as quickly as McMaster may like, though some have expressed interest in buying and preserving the reactors in case regulations change and nuclear energy demand increases, The State reported.
Last week, Santee Cooper’s board of directors named James Brogdon, the company’s former executive vice president and general counsel, interim president and CEO. Carter announced his resignation in August after 35 years at Santee Cooper, including 13 as president and CEO.