Santee Cooper’s Deal With Century Aluminum – Can It Afford To Keep Its Promise?

And is the agreement even legal to begin with?

The big news earlier this week on the energy front in South Carolina was an announcement that the state’s atrociously managed, red ink-ravaged, habitually dishonest government-run utility Santee Cooper had reached a deal with Chicago-based Century Aluminum to continue providing the smelter’s Berkeley county plant with power.

This reported deal won’t bring back the 300 jobs Century was forced to cut a few years ago owing to Santee Cooper’s exorbitant power prices … but it will allow 300 employees to keep their jobs through the end of March at least.

After that, 70 of the lost jobs are expected to come back as part of a three-year deal between the company and the utility – which is facing a flood of criticism over its latest smoke-and-mirrors financial moves.

Here is the problem, though …

Well … two problems.

First, as was briefly referenced during the latest Santee Cooper board meeting, the deal with Century will reportedly involve the utility “adjusting” its scheduled closure of the Winyah Generating Station in Georgetown, S.C.

This facility was supposed to be closed in 2023 as part of Santee’s “reform plan” – which among other things envisioned the utility saving $2.7 billion over the next two decades owing to “a greener energy mix and other efficiencies.”

Now? Winyah’s closure is very much in doubt …

How will Santee Cooper achieve its promised savings and efficiencies if it is still firing up its dirty coal plants?

Good question … we especially look forward to watching Santee leaders explain this new dynamic to reporters at The (Charleston, S.C.) Post and Courier, who have been reflexively regurgitating the utility’s “green” talking points for several months.

This development does not surprise us, of course. Santee Cooper’s plans to shutter its coal facilities – which are currently the focus of a lawsuit – went completely out the window the moment Virginia-based Dominion Energy and North Carolina-based Duke Energy decided to pull the plug on a major natural gas artery.

Without access to this “bridge fuel,” Santee was left with no choice but to keep Winyah online – and live with all of the multi-year bad deals that accompany its continued operation.

The second problem facing Santee as it negotiates with Century is the constraints placed upon the utility’s ability to enter into long-term contracts.

As our readers will recall, state lawmakers imposed tight constraints on Santee Cooper earlier this year aimed at preserving their flexibility regarding the possible offloading of the utility to the private sector.

And while Santee Cooper leaders have been habitually violating those constraints – admittedly – that doesn’t make their actions legal.

So … is Santee’s deal with Century permissible under the terms imposed by lawmakers?

Good question …

“Santee shouldn’t be allowed to enter a new long-term contract with new terms under Act 135,” a source following the debate closely told us, referencing the law passed by the S.C. General Assembly earlier this year.

Is our source correct?

Yes … that law expressly prohibited the utility from “entering into any contracts with a duration of longer than one year, except those contracts necessary in the ordinary course of business.”

Furthermore, it required Santee Cooper to seek – and receive – “authorization of any contract of a duration longer than one year” from an oversight panel comprised of governor Henry McMaster, S.C. Senate president Harvey Peeler, S.C. Senate finance chairman Hugh Leatherman, S.C. House speaker Jay Lucas and S.C. House ways and means committee chairman Murrell Smith.

Did Santee Cooper ask permission this time?

Or did it once again attempt to conduct these negotiations offline prior to presenting state leaders with a fait accompli?

Stay tuned … but our guess is this deal is ripe for a challenge.

Which means this battle could wind up reverting back to court …




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