Santee Cooper Bond Offering: Another Smoke-And-Mirror Move?

Government-run utility makes another dubious fiscal move …

For the second time in as many months, South Carolina’s spectacularly failed government-run utility Santee Cooper has announced fresh “savings” for its ratepayers through the issuance or payment of various bonds.

Sound sketchy? Absolutely … especially considering Santee Cooper bonds are the focus of an ongoing federal investigation.

Anyway …

The latest maneuver by the embattled utility – which state lawmakers are considering offloading – is to sell $163 million worth of “variable rate revenue obligation bonds … to refund existing debt.”

“The transaction achieves projected debt service savings of $40 million over the next 16 years,” a release from the utility touted.

Forty million in savings, huh? Over sixteen years?

Hmmmm … assuming you remain sufficiently self-loathing as to presume Santee Cooper “projections” have even a remote basis in reality, those numbers aren’t exactly blowing up our skirts. Not to criticize fiscal prudence, but with Santee Cooper between $7-8 billion in debt in the aftermath of its catastrophically failed bid to build a pair of next-generation nuclear reactors with its crony capitalist partner SCANA (a.k.a. the NukeGate debacle) – this is scarcely a drop in the bucket.

In fact the botched construction of these reactors – at a cost of $10 billion – has saddled Santee Cooper with at least $4 billion of its current debt load. Also, remember Santee Cooper and SCANA knew this project was doomed – but continued raising rates on consumers regardless.

Which compounded the costs …

(Click to view)

(Via: Santee Cooper)

Want more to raise your irate-o-meters?

As we pointed out the last time Santee Cooper broke out the smoke machines in the hall of mirrors down in Moncks Corner, S.C., the utility has been slapped with several recent credit downgrades (here and here), compromising its ability to borrow money at competitive rates.

Imagine what sort of savings might have been achieved through financing efforts like this had it kept its fiscal house in order?

Unfortunately, keeping its fiscal house in order continues to be the last thing on Santee Cooper’s mind as it pushes so-called “rate freezes” to lock in punitively high energy prices.

And let us not forget the obscene salaries doled out to its new leaders – who are continuing the same failed command economic machinations of their predecessors. Let us also not forget the ongoing subsidization of golden parachutes and criminal defense bills for the leaders who landed it in its current mess. Or Santee Cooper’s aborted effort to make an end-around the legislature by negotiating an unauthorized deal with Atlanta, Georgia-based Southern Company.

Yeah … again … forgive us for not buying what these bureaucrats are selling.

Finally, we are still waiting for Santee Cooper to show us the math on its last smoke-and-mirrors move.

Bottom line? This “savings” announcement may be very good news for certain well-heeled bond attorneys (Santee Cooper pays a ton of money to lawyers), but even if its projections are legitimate it does next-to-nothing to address the utility’s calamitous long-term fiscal position. 



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