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South Carolina Bid Battle: Is Santee Cooper Playing By The Rules?

State-owned utility is flouting the confidentiality provision of recently passed law …

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Next week, South Carolina’s government-run utility Santee Cooper will unveil its so-called “reform” plan. The rollout is the culmination of a major propaganda blitz aimed at keeping the power provider under state control in the aftermath of a command economic experiment gone disastrously awry.

Remember this experiment? For those of you waking up from a two-year nap, the now-notorious #NukeGate project was supposed to produce a pair of next generation nuclear reactors at the V.C. Summer generating station in Jenkinsville, S.C. – but construction was stopped in 2017 in the face of massive cost overruns.

The fallout from the debacle has included a sweeping criminal probe, incessant political/ corporate maneuvering and paltry settlements for ratepayers, who were left holding the bag on billions of dollars in debt related to the project. These same ratepayers will be paying for these abandoned reactors for decades to come.

By way of contrast, what did Santee Cooper’s former chief executive officer received a golden parachute. And ratepayer-subsidized criminal defense representation.

Unbelievable, right? We certainly think so …

But as Santee Cooper seeks to stave off its own extinction by offering a compelling proposal for South Carolina lawmakers to consider, is the state-owned utility playing by the rules? Specifically, is it adhering to a law passed earlier this year that is supposed to govern the debate over its future?

The legislation in question – Act 95 of 2019 – included a confidentiality section ostensibly intended to “protect the integrity of the process.” That section included extensive language governing what the various entities submitting proposals were allowed to discuss publicly.

Which was nothing …

(Click to view)

(Via: Travis Bell Photography)

To be clear: We have long argued against the shroud of secrecy that has been pulled over this bidding process – believing it is less about protecting “the integrity of the process” and more about allowing politicians and their appointees to continue negotiating in the dark.

Such shady, offline negotiations are “an open invitation to corruption,” we opined recently.

How did we get here? Last year, the first piece of the post-#NukeGate puzzle fell into place. SCANA – Santee Cooper’s crony capitalist partner in the reactor project – was sold to Virginia-based Dominion Energy at the end of a contentious, year-long battle. Now state lawmakers – who bear the ultimate responsibility for this cluster – are engaged in a spirited debate over what to do with Santee Cooper.

As we previously noted, there are three options on the table …

Firstsell the utility to a private entity (which has long been our preference).

Secondallow a private entity to manage Santee Cooper in the hopes of restoring some of its lost value.

Thirdapprove Santee Cooper’s soon-to-be-unveiled “reform” plan and let it stay in state hands.

Governor Henry McMaster’s administration has been tasked with submitting what it believes to be the best sale offer and best management agreement to lawmakers – who will then vote “aye” or “nay” on those bids, along with Santee Cooper’s proposal.

While McMaster’s team mulls its options, the law passed earlier this year stipulates that all “information received during this process and ensuing negotiations must be confidential.”

Also from the law …

In order to effectuate the purposes of this section, the department shall require nondisclosure agreements which must be entered into by each individual or entity involved in the process including, but not limited to, an individual or entity that submits a bid or proposal, or receives or reviews any part of the submission.

Cut and dried, right? The first rule of the Santee Cooper bidding process is you don’t talk about the Santee Cooper bidding process.

So here is our question: If the “reform” proposal from Santee Cooper is part of the broader bidding process (which it is), then why is the utility publicly releasing it? Especially when all of the private sector participants – including Dominion, Florida-based NextEra Energy, Charlotte, N.C.-based Duke Energy, Greenville, S.C.-based Pacolet Milliken and New York-based LS Power – have been sidelined by the confidentiality provisions of the law?

That not only seems unfair … but based on our reading of the law it would be illegal.

The private sector utilities competing for Santee Cooper have pulled ads, silenced public relations departments and (with a few notable exceptions) stopped lobbying government officials.

How is it, then, that Santee Cooper is allowed to advance its proposals in the public arena while its private sector competitors remain muzzled?

Did we miss a section of the law that said Santee Cooper was allowed to operate in a vacuum?

Also worth considering: In the event lawmakers were to choose Santee Cooper’s bid over a sale offer or management agreement from a private sector provider, would that not be grounds for a lawsuit?

Stay tuned … we are just beginning to dig into this question. And we apparently aren’t the only ones looking at it, either.

In the meantime, what do you think? Vote in our poll and post your thoughts in our always-lively comments section below.

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Is Santee Cooper abiding by the law governing the bidding process?

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