A prominent limited government group is putting the sale of South Carolina’s atrociously managed state utility at the forefront of its 2021 legislative agenda, according to a letter sent from its leader on Wednesday.
That’s a reference to Santee Cooper – a debt-addled, tone-deaf, truth-averse state-owned power provider that has found itself on the chopping block in the aftermath of its starring role in a $10 billion nuclear boondoggle (a.k.a. NukeGate).
To be clear: The S.C. General Assembly helped plunge the state into the NukeGate disaster back in 2007 – but the current crop of legislators appears to be increasingly inclined to offload this anti-competitive albatross to the private sector.
And with good reason …
(Click to view)
(Via: High Flyer SC)
“Selling Santee Cooper would have a lasting, positive impact on Santee Cooper customers, and potentially our entire state’s fiscal health,” said Evan Newman, the Club’s executive director.
In a letter to supporters entitled “Looking Ahead to 2021,” Newman noted that Lowcountry residents in Santee Cooper’s service area aren’t the only ones “paying the price for the bad business decisions made by bureaucrats who operate the state-owned utility.”
“Santee Cooper is a state agency – similar to the DMV or the Department of Education, meaning Santee Cooper isn’t just a Lowcountry problem,” Newman added. “Santee Cooper is a South Carolina problem.”
Is he correct? Yes … absolutely. Santee Cooper is indeed a statewide problem for a myriad of reasons this news outlet has pointed out ad nauseam in recent weeks (see here, here, here and here for a few recent examples).
According to Newman, the red ink is placing the utility in even deeper peril thanks to the economic impact of the coronavirus pandemic.
“Santee Cooper is a huge liability on the state,” Newman wrote. “The state-owned utility already had $7 billion in debt before COVID. Customers are unable to pay their bills and usage is down due to businesses and schools not operating as normal. They’re expected to lose $24 million this year alone due to the virus. Santee Cooper doesn’t have shareholders to assume the debt or absorb the lack of revenue in these crazy times.”
According to Grace, Santee Cooper is “underfunded by $525 million through 2029″ – a shortfall which “cannot be covered by increasing rates” due to its obligations under a controversial ratepayer settlement.
“Even if Santee Cooper had the best management team in the world, a solid understanding of derivatives, and the most efficient asset base, it still may not be enough to keep afloat if interest rates rise,” Grace concluded. “For the next four to seven years, without the ability to set rates, Santee Cooper is completely at the mercy of the market.”
In his letter to Club for Growth supporters, Newman raised another interesting point – one we had not considered before as it relates to the true cost of Santee Cooper.
“Not only does Santee Cooper put our state’s financial health at risk, (it) has consumed State House time for far too long,” he wrote. “It’s dominated the General Assembly’s schedule for going on four consecutive sessions. Reforms to our broken education system and our tax code that cripples businesses and families alike have fallen to the wayside because of the countless hours of debate and legislative manpower that our lawmakers have poured into a debt ridden, state-owned utility.”
Lawmakers have continued to punt on this issue despite clear and convincing evidence attesting to the efficacy of a sale.
Once again, this is not a novel concept. We argued nearly thirteen years ago that lawmakers should offload this utility to the private sector and get out of the electricity business once and for all.
Instead of listening to us, though, they embarked on NukeGate … and the state is now billions of dollars poorer as a result (with the meter still running).
Will this be the year they finally listen?
Let’s hope so … in the meantime, props to the Club for Growth (and Palmetto Promise) for putting this issue atop their 2021 legislative agendas.
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