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The Santee Cooper “Goat Rodeo”

Can this toxic asset be sold?

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The debacle that is Santee Cooper keeps right on rolling … an unfenced “goat rodeo” of the first order.

Not content with royally screwing ratepayers and South Carolina citizens via its involvement in #NukeGate – the mother of all crony capitalist fails – the state-owned utility is now desperately trying to stave off a looming, multi-billion dollar financial implosion.

Will it work?  No … but that isn’t stopping this abysmally managed entity from trying its damnedest to postpone the inevitable.

Its latest machination?  Santee Cooper is injecting itself into a recent civil settlement involving beleaguered ratepayers of crony capitalist utility SCANA, its partner on the botched construction of a pair of new, next generation reactors at the V.C. Summer nuclear generating station in Jenkinsville, S.C. (a.k.a. #NukeGate).

These reactors were supposed to have been operational in 2016 and 2017, respectively, at a cost of $9.8 billion … but weren’t.

The money was spent, the reactors simply weren’t completed … and the utilities couldn’t afford the $10-16 billion price tag necessary to finish them.  And so last July, Santee Cooper pulled the plug on the project – killing an estimated 5,600 jobs in the process.

(Click to view)

(Via: High Flyer)

Santee Cooper is demanding the recent ratepayer settlement be blocked unless it gets a piece of the action … even though it has absolutely no claim whatsoever to the agreement (and even though there is damning evidence implicating its leaders in potentially criminal conduct related to the botched project).

Unbelievable, right?

Not really.  Santee Cooper is also demanding the S.C. supreme court affirm its right to continue raising rates on customers for a pair of nuclear reactors that will never be built.  Furthermore, it is insisting upon a piece of a proposed $15 billion private sector merger between SCANA and Virginia-based Dominion Energy.

In all three cases, we believe Santee Cooper’s leaders are insane.

“Santee Cooper has been habitually dishonest with the public regarding the status of this project,” we wrote in a deep dive on the troubled utility earlier this year.

Specifically, we uncovered construction schedules and cost estimates buried in Santee Cooper bond documents that directly conflicted with the findings of a 2016 report on the status of the nuclear expansion project.  Santee Cooper also tried to raise rates on customers to subsidize the project just one week before pulling the plug on the multi-billion dollar failure.  Weeks later, it gave its disgraced former CEO a $16 million golden parachute.

Yeah …

In other words, the authors of this command economic disaster deserves everything that’s coming to them …

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(DOMINION ENERGY)

But when all is said and done: Who gets Santee Cooper?

Years ago, this news outlet proposed selling it – but state leaders eager to continue leveraging it for “economic development” wouldn’t listen.  At the time, it could have netted taxpayers billions.  And some maintain a sale of the utility remains feasible despite its debilitating debt.

South Carolina governor Henry McMaster has been trying to unload Santee Cooper for more than a year via a fire sale, and state lawmakers recently began weighing options on the future of the toxic asset.

Have any credible purchase offers emerged?   No.

We reported exclusively back in March on a secretive deal rumored to have been advanced by Florida-based NextEra Energy, although that anonymous proposal included a nine-figure taxpayer bailout.  Such a bailout was – and is – totally unacceptable from our perspective.

According to our sources, NextEra representatives made a verbal offer for the utility during the most recent round of legislative negotiations this fall – but their rumored proposal was not taken seriously.

“It was embarrassingly low,” a source familiar with the number told us.

In January, the floor will be opened for new bids … at which point we suspect NextEra will come forward with a formal, public proposal.

In the meantime, Dominion has advanced a proposed “management arrangement” which would add Santee Cooper to its network but permit the state to retain ownership of its various assets – similar to the “landlord-tenant” proposal pushed by state senator Tom Davis in connection with the Palmetto State’s non-competitive port infrastructure assets.

Davis is not a fan of the Dominion proposal, however.  He wants to sell the asset.

(Click to view)

(Via: Dominion Energy)

Against this backdrop, increasing pressure is being applied by various politicians, advocacy groups and think tanks with the stated goal of selling Santee Cooper.  For example, the S.C. Club for Growth – a limited government advocacy organization – recently launched the website SellSanteeCooper.com in an effort to push the sale of the utility.

That website explicitly rebuked the idea of a management agreement, which it argued would not “solve the issue of Santee Cooper’s massive debt” or “get South Carolina OUT of the power business.”

Two fair points …

The group is also running radio ads across the state urging the sale of Santee Cooper.

Similarly, the Palmetto Promise Institute – which until recently had been focused primarily on education issues – has emerged as a significant player in the energy debate (most recently via the publication of a report touting the virtues of expanded “energy choice“).

And as we have previously noted, there has been considerable chatter related to certain politicians who have landed themselves neck deep in this debate – most notably senate majority leader Shane Massey.

Despite the legitimate questions currently being raised as to the funding source for these various campaigns (which, again, are being launched a decade too late in our humble estimation) we still support their stated policy objective.

“This news site favors selling this asset outright,” we wrote earlier this week, adding that “we do not prefer a management agreement in this situation.”

Having said that, there may be no other option on the table.  Certainly not one in which South Carolina taxpayers and Santee Cooper ratepayers – who have already been victimized by this debacle – don’t wind up taking another multi-billion dollar bath.

As we reported earlier this week, the battle over the utility’s future is part of a broader war for energy supremacy being waged in the Palmetto State – one with multiple fronts and multiple actors.  Some of those actors are operating in the sunlight, others … not so much.

One phase of this war (the battle for SCANA) is clearly drawing to a close, but the next front (the battle for Santee Cooper) is obviously opening up … fast.

Stay tuned … we will continue to follow these battle lines as they unfold, especially as it relates to the unfenced goat rodeo that is Santee Cooper.

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