Reporter Avery Wilks of The (Columbia, S.C.) State newspaper ran a big story over the weekend. The focus of the piece? How the South Carolina Senate “doesn’t have the votes” to sell government-run utility Santee Cooper in the aftermath of #NukeGate, the Palmetto State’s spectacularly failed government intervention in the energy industry.
This news outlet has been reporting on that particular bit of information for several months …
For those of you uninitiated, Santee Cooper is a state-owned power provider (there’s your first indication of a problem) that has played a starring role in #NukeGate – the botched construction of a pair of next generation nuclear reactors in Fairfield County, S.C. The collapse of this project has left Palmetto State ratepayers and taxpayers with a $10 billion hole in the ground – spawning ratepayer lawsuits, political intrigue, criminal investigations and a furious debate over how to resolve the unprecedented command economic disaster.
South Carolina governor Henry McMaster has been pushing to sell Santee Cooper on the cheap since the fall of 2017, but given the dire financial straits in which the utility currently finds itself – and the loss of tax breaks any private sector buyer would have to absorb upon purchasing it – such a deal seems unlikely.
(Click to view)
(Via Travis Bell Photography)
Even if there were a willing buyer, state lawmakers are unwilling to surrender their stranglehold over the utility – which they routinely raid to buttress taxpayer-funded “economic development” deals.
In early November, we reported that “one state senator – fiscally liberal Republican Larry Grooms – has vowed to block the sale of the utility via a filibuster.” Not long thereafter, we reported that Grooms had the votes to hold such a filibuster.
Wilks’ report confirmed as much …
“I don’t believe the votes are there to sell Santee Cooper,” Senate minority leader Nikki Setzler told the reporter.
Wilks also quoted fiscally liberal Republican senator Chip Campsen – a longtime defender of the status quo (and the über-wealthy) in the Palmetto State – as saying “there’s enough opposition that could stop” a sale of Santee Cooper, perhaps via a “coordinated filibuster.”
Again … this is not news. Or at least it is not “new” news.
Of course, Wilks’ report does raise (or re-raise) a question we have been asking for several months now: Just what is South Carolina supposed to do with this albatross?
First, let us briefly recap how a multi-billion dollar asset turned into a multi-billion dollar liability.
With state lawmakers cheering them on (and socializing their investment risk), Santee Cooper and its private sector partner SCANA partnered on the abandoned V.C. Summer nuclear generating station expansion project in Jenkinsville, S.C. (a.k.a. #NukeGate).
Its two reactors were supposed to have been operational in 2016 and 2017, respectively, at a cost of $9.8 billion … but they 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. In July of 2017, Santee Cooper pulled the plug on the project – killing an estimated 5,600 jobs in the process.
Of course, Santee Cooper tried to raise rates on customers to continue subsidizing the project just one week before scuttling it – even though its leaders knew more than a year earlier that the project was doomed.
Weeks after pulling the plug, the utility gave its disgraced former CEO – who is still billing the state for his legal fees – a $16 million golden parachute.
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(Via: High Flyer)
“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 last spring.
Specifically, we uncovered construction schedules and cost estimates buried in Santee Cooper bond documents that directly conflicted with the findings of a belatedly disclosed 2016 report on the status of the nuclear expansion project.
The documents hinted at deception on a massive scale, people … with massive costs to the state.
This news outlet proposed selling Santee Cooper over a decade ago when it would have netted the state billions of dollars, but now the utility is up to its eyeballs in debt – one of many factors making its sale all but impossible.
We reported exclusively last 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.
Meanwhile, Virginia-based Dominion Energy – which recently purchased SCANA – has floated a yet-to-be-detailed “management arrangement” which would add Santee Cooper to its network but permit the state to retain ownership of the utility’s various assets. This arrangement would be similar to the “landlord-tenant” proposal pushed by state senator Tom Davis in connection with the Palmetto State’s non-competitive port infrastructure assets.
Dominion is not interested in purchasing Santee Cooper, however.
As for NextEra it would reportedly prefer to own the utility, but given the aforementioned legislative recalcitrance the company may have no choice but to submit a proposed management agreement of its own – or attempt some sort of partnership with the state’s electric cooperatives, who are interested in owning Santee Cooper as a nonprofit.
This news outlet continues to believe Santee Cooper should be unloaded at the earliest possible opportunity – and we rebuke senators like Grooms and Campsen for threatening filibusters in the hopes of allowing state government to continue its failed experiment in the utility business (and for that matter its failed experiment in the “economic development” business).
Neither of those are core functions of government. All they do is perpetuate corporate cronyism, income inequality, higher energy bills and other abysmal outcomes … like #NukeGate.
The sooner we can get government out of the energy business the better, although it appears as though South Carolina’s “leaders” have done such a magnificently disastrous job such a positive outcome – like so many other aspirational outcomes in the Palmetto State – has become a pipe dream.
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