It is time to face facts: There is no saving Santee Cooper.
South Carolina’s disastrously managed, state-owned utility – one of the key players in the Palmetto State’s still-unspooling #NukeGate disaster – is going under.
Despite political promises that the government-run power provider is going to be sold, the best the state can realistically hope for at this point is a private sector provider assuming its crippling debt. And even that could be a bridge too far as its politically appointed bureaucracy continues to fumble through the fallout of its decision to abandon a pair of next-generation nuclear reactors at the V.C. Summer nuclear generating station in Jenkinsville, S.C.
No wonder the utility – which is currently at the heart of a political power struggle in the state capital in Columbia – is petitioning the S.C. Supreme Court in an effort to continue raising rates on beleaguered customers (who, incidentally, are not experiencing much in the way of economic opportunity at the moment).
And who will never get a watt of power from V.C. Summer …
Hold up … haven’t South Carolina politicians of both parties been touting Santee Cooper for decades as being key to the state’s “economic development” efforts? Yes … (and never more so than in the run-up to #NukeGate). But all the crony capitalist handouts the utility has received – and awarded – have failed to lift our state out of its ongoing malaise.
Now the true cost of government-run power generation is about to become clear …
A new report (.pdf) issued last month by Columbia, S.C. think tank Palmetto Promise Institute revealed that Santee Cooper ratepayers are considerably more exposed to the fiscal fallout of #NukeGate than ratepayers of SCE&G, a subsidiary of crony capitalist energy provider SCANA (the other entity mixed up in this disaster).
“Santee Cooper customers will pay a total of $50,294 per customer by the time the project debt is paid off in 2056; whereas SCANA customers will pay just under $15,000 over the next 50 years,” the report’s authors concluded. “These differences are almost entirely due to the differences in the number of customers each entity serves. Santee Cooper has roughly 180,000 retail customers whereas SCE&G has over 700,000. A customer-base of 700,000 means over 3x more customers to spread the cost of the failed project.”
Santee Cooper ratepayers have already seen their power bills climb by 15.2 percent since 2012 … and the utility was on the verge of enacting another massive rate hike in late July of 2017. Its customers have already shelled out an estimated $540 million (or roughly $1,200 per customer) toward #NukeGate, with no chance of that money being rebated.
SCANA customers could receive rebates of up to $1,500 … assuming a deal for the company submitted by Virginia-based Dominion Energy goes through. As of this writing, though, state lawmakers have considerably gummed up the works related to that agreement.
What about Santee Cooper ratepayers?
They are screwed no matter what happens …
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(Via: Santee Cooper)
“Santee Cooper customers can expect to pay – in a best case scenario – a minimum of 50 percent more than SCE&G customers over the course of V.C. Summer debt repayment,” Palmetto Promise Institute president and CEO Ellen Weaver said.
Even more galling? Santee Cooper leaders were touting the nuclear project as their rationale for rate increases as late as July 2017 – more than a year after receiving a report which made it clear the project was doomed.
According to utility executives, the revenue from the rate hikes was needed to pay for “costs associated with nuclear construction and other system improvements.”
Nine days after offering this explanation, though, Santee Cooper pulled the plug on the V.C. Summer expansion. This was the point of detonation for #NukeGate: A spectacularly failed command economic intervention in the energy industry that was initiated and overseen by the state’s “Republican” legislature – whose members are now seeking to play the role of savior in this ongoing drama.
Make no mistake: They are not saviors …
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(Via Travis Bell Photography)
If anything, lawmakers are now in the process of compounding their initial error – which was to socialize the investment risk associated with the nuclear reactors at V.C. Summer.
Over a decade ago, the “Republican-controlled” S.C. General Assembly authorized and empowered Santee Cooper and SCANA to spend more than $10 billion on this project. The reactors were supposed to have been operational in 2016 and 2017, respectively, but that didn’t happen. The $10 billion was spent, but the reactors weren’t finished – and will never be. The two utilities cannot afford the estimated $10-16 billion price tag necessary to complete them. And so a year ago, Santee Cooper pulled the plug on the project – killing an estimated 5,600 jobs and throwing the Palmetto State’s energy and economic future into chaos.
“Santee Cooper has been habitually dishonest with the public regarding the status of this project,” we wrote in our most recent deep dive on the troubled utility.
Specifically, our reporting uncovered construction schedules and cost estimates included in Santee Cooper bond documents – used to finance its borrowing – that directly conflicted with the findings of a 2016 report on the status of the nuclear expansion project.
Don’t worry, though … a decade (and billions of dollars) too late, state lawmakers are finally getting around to studying the sale of this “asset.”
And governor Henry McMaster has installed one of his political cronies at the head of the troubled utility’s board.
What could possibly go wrong, right?
Make no mistake: Heads are going to roll. Criminally and civilly, there will be an accounting for this fleecing of the people of South Carolina.
But here’s the thing, none of that is going to change the value (or lack thereof) of Santee Cooper as an asset.
“Santee Cooper ratepayers’ pain is yet to come,” Weaver said.
She is absolutely correct …
Unlike SCANA, Santee Cooper has no equity to fall back on. Its only way to get out of its current hole is to raise rates – which is precisely why it has gone to the S.C. Supreme Court in search of an order authorizing it to uphold its “statutory mandate and duty to set rates that cover its expenses … including debt obligations.”
No wonder the only “offer” ever discussed for this utility – an anonymous proposal exclusively unearthed by this news site four-and-a-half months ago – would have involved hiking rates along with a massive taxpayer-funded bailout.
So no … there will be no sale of Santee Cooper (certainly not one that leaves taxpayers and ratepayers unscathed).
There will only be higher power bills for a project that will never provide a single watt of power … and that’s assuming state leaders can get someone to assume the debt on the utility.
Like we said … “doomsday.”
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