Santee Cooper. It has been the debt. It still is the debt. Customers continue to be on the hook. Santee Cooper’s business forecast lacks action.
The recently released Santee Cooper business forecast released September 9 said, in part:
“The Forecast also contemplates (our italics) several strategic financial transactions and cost saving initiatives including:
- Committing over $925 million to nuclear debt payoff in the near term – $350 million from currently available internal funds, an additional $150 million in internal funds in 2020, and $425 million that we anticipate receiving from the sale of the V.C. Summer Units 2 and 3 equipment over the next year or two.
- Refunding $175 million of outstanding mini-bonds with lower interest rates debt.”
The debt has been pegged at $7 billion+. The plan is talking millions about billions owed and does not address the debt or consumer impact.
Santee Cooper debt is owed by its customers. In the past the debt was estimated at more than $6,500 per customer. In various cities in the Santee Cooper service territory, that is a significant part of a year’s pay:
- In 2017, the median household income of Moncks Corner residents was $50,840. (Source)
- Bamberg: $37,931. (Source)
- Georgetown $31,273 (Source)
Debt burden for families is already high. As we enter the fall and holiday season, consider that a January 2019 story said there were 28% of families still paying for their holiday – not 2018, but 2017.
In the U.S., corporate debt is signaling a warning sign to some analysts.
Just last week the Wall Street Journal reported, “Warning signals are starting to flash in the market for junk debt, an indicator that investors are worried that companies with high debt loads could be at risk even if the U.S. economy avoids recession.”
Santee Cooper has had two financial downgrades, sitting now just above companies with investment instruments some call “junk bonds.”
Some business experts make the case that the amount of debt is not the issue, but the reason for debt is. “There is also concern that some debt may not be financing productive investment. There is evidence that a large share of the borrowing that companies are currently doing is not being used to invest in growing their own productive capacity.” (Source – PBS Newshour)
Is the financing in Santee Cooper largely being used for a productive asset or is it largely being used to pay off a cancelled plant that will never operate?
Here’s a thought. The energy industry has a lot of moving parts, like renewables, coal issues, energy efficiency, transmission and workforce issues. That is a significant list.
Add customer debt, too? Not when the state can clean the slate. Get customers off the hook.
We encourage the SC Department of Administration to move forward expeditiously to meet the deadline of Jan 15, 2020 to make recommendations to the SC General Assembly concerning Santee Cooper’s future.