COLUMBIA, S.C. (AP) — South Carolina could pay off billions in debt and end uncertainty over lawsuits if it sells its state-owned utility, Santee Cooper, but the move would cost ratepayers more money over the next 20 years, state fiscal officials say in a newly released report.
Lawmakers asked for the report from the state Department of Administration last year as they grapple with the fallout from abandoning construction on two new nuclear reactors in South Carolina in 2017. Scrapping the projects after billions were spent and not a watt of power generated forced a takeover of private utility Scana and put the future of Santee Cooper in doubt.
The Department of Administration spoke to 10 companies considering bids. As directed by lawmakers, the 111-page report released Tuesday identified the best bid to sell the company, the best bid for a private company to manage Santee Cooper and what the public utility could do if allowed to reform itself.
Santee Cooper has about 190,000 direct customers, but about 2 million people rely on its power through electric cooperatives in every county in South Carolina. The report noted the co-ops are bound to Santee Cooper by contract for nearly 40 more years unless the utility is sold, but says the co-ops would agree with the other two options.
The report also noted there are no comparable examples of a public utility sale in recent U.S. history.
The reactors “left the State with a $4 billion problem — namely, how to provide relief to Santee Cooper’s retail and wholesale customers burdened by the payments on debt incurred for a costly power plant that would never provide them with electricity,” the report said.
It’s now up to the state House and Senate to decide what to do.
NexEra out of Florida is offering to buy Santee Cooper and pay off up to $6.9 billion in debt. NextEra is also offering more than $540 million to settle a lawsuit by ratepayers over the nuclear debacle and $400 million in additional relief for customers who use Santee Cooper’s power.
But other aspects to the NextEra deal may trouble lawmakers. The Juno Beach, Florida, company said it will cut more than 700 jobs over a decade, or more than 40% of the utility’s workers. NextEra’s proposed rates over the next 20 years are expected to be more costly than Santee Cooper’s if it is not sold. As a private company, NextEra would have to pay taxes, unlike the publicly owned utility.
Santee Cooper’s own reform plan includes no guarantees how the ratepayer lawsuit might end. It offers reforms like term limits for board members and a promise to be more transparent on major projects and rate increases. The utility also promises lower rate increases and a plan that would only cut 300 jobs over a decade.
The document says Santee Cooper at times didn’t fully cooperate with the people compiling the report, adding “Santee Cooper does not have a history of effecting the kinds of changes contemplated by the Reform Plan.”
Santee Cooper was founded during the Great Depression to provide power to large parts of an agrarian state where private companies didn’t want to serve. It has deep, generational ties to the community and runs two lakes and other public works projects.
The report offered the fewest specifics about the third option, allowing Santee Cooper to be managed by Dominion Energy of Virginia. Dominion would provide at least three executives to Santee Cooper. The company touted benefits since it took over the territory powered by neighboring Scana after the reactors were mothballed. But officials couldn’t fully estimate what would happen to power bills under Dominion’s management.
Republican Gov. Henry McMaster said the report confirms Santee Cooper must be sold to let the state continue growing economically and keep South Carolina taxpayers from having to shoulder the utility’s debt — a position he has pushed for more than two years. He didn’t comment on the Dominion management proposal, but said Santee Cooper executives have proven they are incompetent.
“The more time that has passed, the more I’ve been convinced they cannot run themselves,” McMaster said Tuesday.
House Speaker Jay Lucas immediately scheduled eight meetings of the House Ways and Means budget writing committee over the next month. He said he hasn’t read the report and has no opinion yet, but promised swift action to provide some certainty after 30 months of limbo once the reactors’ construction was halted.
“The next 30 days will be a process for us like we never undertook,” the Republican from Hartsville said. “It will be a decision that will be talked about for a long time.”
Follow Jeffrey Collins on Twitter at https://twitter.com/JSCollinsAP