This news outlet has written extensively over the last few months about the so-called “reform plan” for South Carolina’s atrociously managed, debt-addled government utility – Santee Cooper. For those of you new to this debate, Santee Cooper is billions of dollars in debt after its starring role in the botched construction of two since-abandoned nuclear reactors in Jenkinsville, S.C.
Astoundingly, after helping set the state back by more than $10 billion in connection with this fiasco – Santee Cooper’s leaders (and its legislative apologists) now wants members of the S.C. General Assembly to trust the utility to “reform itself.“
More incredulously, the same politicians who orchestrated the NukeGate fiasco now want to be perceived as leaders of this so-called “reform” effort.
Does that make any sense? No …
Rather than continuing to trust the failed architects of this command economic albatross, lawmakers should do what Folks recommended they do more than thirteen years ago – which is to offload Santee Cooper to the private sector.
Anyway, we can debate the politics of this issue all day long … just as we could engage in an ideological discussion as to whether government ought to be involved in the power generation business.
Ultimately, though, the issue boils down to simple economics … specifically, whether the financial assumptions that go along with “reform” make sense.
Do they? No …
As this outlet has meticulously documented, Santee Cooper’s avenues for achieving its ambitious “reform” objectives have fallen by the wayside one-by-one … leading to an unauthorized escalation of debt last fall (and last month’s acknowledgment that more debt was on the way).
This course is fiscally unsustainable … and none of Santee Cooper’s legislative allies have offered anything resembling a plant to address it.
Last year, Santee Cooper pledged to save $2.7 billion over the next two decades owing to “a greener energy mix and other efficiencies.” Key to this new “mix” (and the promised savings)? The shuttering of the utility’s antiquated coal-fired power plants – and all the economic baggage associated with them.
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Unfortunately, Santee’s plans 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 last summer.
That decision left Santee Cooper with only one real option for purchasing the power it would need …
Specifically, the utility would have to make a deal Atlanta-based Southern Company to purchase power from Plant Vogtle – where a pair of next-generation nuclear reactors (identical to the ones that were abandoned in South Carolina) are scheduled to come online in November 2021 and 2022, respectively.
Or were scheduled to come online …
This week, Southern signaled a “potential delay” at Vogtle in its latest filings with the U.S. Securities and Exchange Commission (SEC). In fact, the company referred to its November 2021 deadline as being “challenged” owing to construction delays it attributed to the coronavirus pandemic.
(Click to view)
(Via: High Flyer SC
How “challenged?” According to reporter Kristi Swartz of Enivornment and Energy News, Southern officials estimated that the pandemic “ate up roughly three (to) four months of productivity” at Vogtle – which “could impact the ability to achieve” the promised launch date for the first reactor.
“This is not a surprise,” Swartz noted. “Southern has been warning about productivity challenges that were exacerbated by Covid-19 since last year.”
While not a surprise, Santee Cooper simply cannot achieve its promised savings without this power coming online … and without it coming online quickly. In fact, there are legitimate questions as to whether its pie-in-the-sky projections can be attained even if Vogtle comes off without a (further) hitch – as its many delays have forced Southern into a position of recouping losses on the plant within a shorter time window.
Which means higher rates for those buying its power …
As this news outlet has previously documented, concerns about Vogtle’s viability have persisted for years – with some suggesting the reactors would never be completed. That doom-and-gloom scenario now appears unlikely (at least that’s the hope), but when it comes to Santee Cooper it is less a question of “if” and more a question of “when.”
Even a four-month delay on Vogtle’s launch could have catastrophic cash implications for this beleaguered utility … which sinks further under water with each passing month.
Again … we enjoy covering the political theater associated with the Santee Cooper debate. It’s great for clicks. And subscriptions. And anyone familiar with our founding editor knows he loves a good philosophical debate over the role government should – and shouldn’t – play in our lives.
But this is no longer a political drama – or an ideological debate.
It is a simple question of math … and Santee Cooper’s “reform” plan doesn’t add up. Especially now.
Lawmakers should, at long last, heed our advice and offload this toxic asset before it is too late. Otherwise, there may be no getting rid of this albatross.
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