You would think it wouldn’t take a “conservative coalition” to convince Republican lawmakers in one of the reddest states in America that government shouldn’t be in the energy generation business. Alas, though, this is South Carolina … where so-called “Republican” lawmakers are fighting tooth-and-nail to keep the Palmetto State on the hook for an anti-competitive albatross known as Santee Cooper.
For those of you new to this debate, Santee Cooper is a state-owned utility that is currently billions of dollars in debt after its starring role in the botched construction of two since-abandoned nuclear reactors in Jenkinsville, S.C.
For years, the agency misled the public (and its bondholders) regarding the true status of these reactors – all so it could continue raising rates on customers to subsidize their construction.
Astonishingly, when the deception was finally exposed the utility rewarded its former chief executive with a $16 million taxpayer-funded golden parachute.
Not in South Carolina, sadly … as this is the sort of failure state lawmakers routinely reward. Like a “Kick Me” sign with lots and lots of zeroes behind it.
Anyway, our founding editor Will Folks christened this scandal “NukeGate” – and has documented how it set the state back more than $10 billion (and counting). He has also continued to push for the privatization of the agency – something he first proposed doing more than thirteen years ago.
Had lawmakers listened to him at the time, there would have been no NukeGate – just a multi-billion dollar cash windfall.
Despite its track record of dysfunction and dishonesty, Santee Cooper and its apologists continue to claim the agency can “reform itself.” However, as we pointed out last week all the avenues for achieving the cost savings promised as part of this “reform” plan have collapsed.
Which means the politically run utility is stuck producing expensive, environmentally unfriendly power in its anti-competitive, government-maintained monopoly …
Seriously, though … take all of the politics and all of the ideological considerations out of the equation. The math just doesn’t add up.
In fact, things are so bad Santee Cooper recently embarked upon another unauthorized escalation of debt – and warned last month that more unauthorized debt accumulation was on the way.
Like we said … an albatross.
This week, the aforementioned “conservative coalition” piped up in support of offloading Santee Cooper to the private sector.
According to a news release, the S.C. Club for Growth, Faith Wins, the S.C. Association of Taxpayers and the Palmetto Promise Institute are collectively pushing lawmakers to “sell Santee Cooper,” which they described (correctly) as a “heavily indebted and mismanaged state agency.”
“True reform of the government-owned and operated utility is impossible … only a sale will give Santee Cooper and co-op ratepayers relief from the billions in debt from the V.C. Summer nuclear debacle and get our government out of the utility business,” the group noted in its release (.pdf).
The coalition’s lead argument? A compelling one – namely that Santee Cooper cannot avoid drowning in the rising tide of red ink.
“No matter how you message it, no amount of reform will take care of Santee Cooper’s debt,” the group noted. “Nearly every state agency and private company carries debt, but Santee Cooper is different since the only source of payment for this debt is its direct serve customers, and the customers of the co-ops Santee Cooper serves. They carry the full weight of Santee Cooper’s $6.8 billion worth of mistakes, including $4 billion for a half-finished nuclear plant that will never generate any electricity. That’s downright wrong.”
The group also took aim at a so-called “reform” bill being championed by Santee Cooper’s top legislative apologist and one of the architects of the NukeGate disaster – Luke Rankin.
“Under the current reform bill Santee Cooper will remain a self-regulated state agency with no avenue for oversight,” the group said. “Reform of any kind keeps Santee Cooper as a state agency operated by bureaucrats. We believe in limited government, it’s time to act like it and sell Santee Cooper to private industry.”
Actually it is past time this happened … South Carolina lawmakers should have sold Santee Cooper before they amassed an unconscionable, unsustainable, unresolvable amount of debt.
Last February, Florida-based NextEra Energy submitted the top offer to purchase Santee Cooper – agreeing to pay off its mountain of debt. According to the company’s chief executive officer, Jim Robo, the $9.6 billion offer would provide for “the immediate eliminate of all of Santee Cooper’s existing debt, billions of dollars in new investment in clean energy generation throughout the state of South Carolina, hundreds of millions of dollars in additional refunds to Santee Cooper customers in the first year, hundreds of millions of dollars to be remitted as general revenues to the State and billions of dollars in new state and local taxes.”
Is this offer perfect? No. Of course, NextEra has signaled a willingness to continue negotiating … which is no doubt a scenario Rankin and other Santee Cooper supporters are eager to avoid.
Whatever you think of the NextEra proposal, though, one thing is clear: The longer South Carolina waits to offload this “rogue agency,” the more damage it will do to ratepayers and taxpayers across the state.
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