Crony capitalist energy provider SCANA is in its death throes – staring down bankruptcy, a corporate takeover or some combination of the two. In fact, sources close to the Cayce, South Carolina-based company tell us it is in the midst of a “major internal restructuring” in anticipation of its eventual demise.
Even the possibility of a federal bailout isn’t enough to save the beleaguered power provider, we’re told.
“A bailout may save the project, it’s not saving the company,” one source familiar with the situation told us. “If those reactors ever get built, it won’t be by SCANA.”
“It’s over, it’s inevitable,” a source at SCANA agreed, adding that discussions of bankruptcy or a corporate takeover are part of the secret negotiations allegedly taking place between utility executives and state officials.
In fact, efforts are reportedly underway to “link SCANA” to an attempted sale of the state’s debt-addled government run utility, Santee Cooper.
“The economies of scale work much better if sell them both together,” a source familiar with the discussions told us.
South Carolina governor Henry McMaster – who has taken boatloads of cash from both utilities – is desperately trying to unload Santee Cooper. McMaster is also one of the Palmetto public officials reportedly having “offline discussions” with SCANA.
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(Via: Santee Cooper)
Both SCANA and Santee Cooper have been crushed by #NukeGate, a spectacularly failed command economic experiment which was supposed to have produced a pair of next generation nuclear reactors in Jenkinsville, S.C.
The two utilities spent the past decade building these reactors at a cost of $9.8 billion. The money was spent, but the construction was never finished. In fact the project isn’t even half-finished – with the cost to complete the reactors reportedly ranging between $9-16 billion.
Unable to pay its share of that cost, Santee Cooper pulled the plug on the project three months ago – killing an estimated 5,600 jobs and throwing the state’s energy future into chaos.
Recently released documents revealed executives at both utilities knew over a year-and-a-half ago that the project was doomed – yet continued to raise rates on consumers anyway. In fact, ratepayers are shelling out an estimated $37 million per month on these reactors … still.
Those payments are thanks to the controversial “Base Load Review Act,” a piece of constitutionally dubious special interest legislation advanced by liberal “Republicans” – and then allowed to become law by former governor Mark Sanford.
Not surprisingly, the failure of this project has spawned numerous lawsuits and a pair of criminal investigations – one state, one federal.
Arguably the biggest lawsuit of them all – a class action led by Columbia, S.C. attorney Pete Strom – has a major hearing scheduled for next week. At that hearing, Strom and S.C. attorney general Alan Wilson will argue that the court should appoint a receiver to temporarily take control of potentially billions of dollars of assets flowing into SCANA’s coffers in the aftermath of the botched reactor project.
In addition to federal relief (and revenue from its ongoing rate increases on consumers), SCANA is slated to get $1.4 billion from Toshiba – the parent company of Westinghouse, the former lead contractor on the project.
Our guess is rumors of an impending bankruptcy/ corporate takeover of SCANA will work in Strom and Wilson’s favor as they argue their case next week.
SCANA is becoming an increasingly attractive takeover target. Its stock closed at $42.01 on Thursday – down a whopping 43.7 percent since last December. In fact the stock is down 37.8 percent since the #NukeGate debacle first became public three months ago.
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