The announcement of a proposed legal settlement between South Carolina’s abysmally managed state-owned utility, Santee Cooper, and multiple other parties is the latest chapter in a convoluted corporate, legal and political saga – one that has played out over the past two-and-a-half years in the aftermath of a failed, government-run nuclear reactor project in Fairfield county, S.C.
News of the latest settlement – first reported by Avery Wilks and Andrew Brown of The (Charleston, S.C.) Post and Courier – has a host of implications. First, it threatens to derail a proposal by Florida-based NextEra Energy to purchase the debt-addled, government-run power provider from the state for $9.4 billion. Meanwhile, the involvement of another major power player – Virginia-based Dominion Energy – has the potential to raise the stakes of the settlement even higher considering Dominion currently has a proposal before state lawmakers to manage Santee Cooper.
These are some of the most powerful energy interests in America, people … and their proposals are being considered alongside a so-called “reform” plan from Santee Cooper, which is desperate to avoid being sold to (or managed by) the private sector.
We do not take the Santee Cooper proposal seriously, but many prominent legislative leaders – including fiscally liberal state senators Luke Rankin and Larry Grooms – have made it abundantly clear they want to see Santee Cooper remain under state control.
The latest battleground in this ongoing fight? A lawsuit stemming from NukeGate – the Palmetto State’s spectacularly failed intervention in the nuclear power industry from 2008-2017. We reported on this lawsuit last month, citing sources who told us “Santee Cooper and Dominion have been engaged in extensive negotiations related to a variety of legal claims” tied to NukeGate.
“It is not immediately clear whether the two sides are close to an agreement,” we added.
Apparently they were closer than we thought …
Per the terms of the proposed settlement (as outlined by Wilks and Brown), ratepayers of the utility and the twenty electric cooperatives it serves would receive $520 million in exchange for dropping the class action lawsuit. Of this sum, $320 million would come from Dominion while the remaining $200 million would come from Santee Cooper – again, per Wilks and Brown’s sources.
Wait … where is a utility that is currently more than $7 billion in debt going to come up with $200 million?
Good question … although you can probably guess the answer.
How did we get here? To recap: Incentivized by state lawmakers, Santee Cooper and its crony capitalist partner SCANA spent $10 billion on the construction of a pair of next-generation nuclear reactors in Jenkinsville, S.C. in 2016 and 2017, respectively.
Despite the massive cash outlay, the V.C. Summer nuclear generating station expansion project was never finished – and Santee Cooper and SCANA couldn’t afford the estimated $10-16 billion price tag necessary to complete it. On July 31, 2017 Santee Cooper pulled the plug. Shortly thereafter, it was revealed executives at both utilities knew the project was doomed for years and didn’t warn the public.
In addition to multiple civil lawsuits there is also a lingering criminal investigation into NukeGate being led by the office of acting U.S. attorney Lance Crick.
(Click to view)
(Via: SC High Flyer)
Readers will recall NukeGate received a capable assist from the S.C. General Assembly, which allowed SCANA (which owned a 55 percent stake) to socialize more than $2 billion of its investment risk. Lawmakers and their appointed bureaucrats also allowed Santee Cooper to raise rates and rack up billions of dollars in debt related to the construction of the since-abandoned reactors.
Will any of that money be recovered?
Wilks and Brown touted “cash refunds” as a part of the settlement, but again … does anybody really need a reminder of how that worked out last time?
“The rate payers continue to get dumped on … a hundred million here, a hundred million there … a billion here and billion there,” one frustrated cooperative member told us. “When will the insanity end?”
Easy: When lawmakers cut the cord.
This news outlet proposed privatizing Santee Cooper over a dozen years ago – when it would have fetched the state billions (debt-free). Lawmakers clearly didn’t listen, though, just as they have failed to heed our advice about privatizing South Carolina’s government-run port facilities – which continue losing competitive ground to neighboring Georgia and other rival maritime states.
Grooms, incidentally, is also a major proponent of maintaining state control over the ports – which runs counter to his so-called “conservative” ideological moorings.
Ultimately, it boils down to this: There are things government should do and things it absolutely should not do. Running a power company clearly falls into the latter camp.
We thought South Carolina’s leaders had learned that lesson the hard way, but it is looking increasingly as though they haven’t …
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