“South Carolina-owned Santee Cooper took another rating hit due to ongoing legal and political problems related to its ownership share in a shelved nuclear reactor project.” That is the lead sentence from Bond Buyer magazine this week (June 27).
Santee Cooper financial ratings lowered. Again. Financial ratings typically indicate levels of risk for an enterprise. Santee Cooper ratings were lowered in November, too.
“The rating report is about more than electricity. It notes various business risks that can affect business performance. Some of these risk items may carry more weight than others. For instance, in noting overall business issues the ratings agency called them, ‘Pronounced legal and political risk.’
That is a mighty direct statement by the rating agency. A call for clear and deliberate action, no halfway measures, it could seem. Adhere to the criteria that have been outlined to make organizational changes or transfers that are good for consumers.’
A positive that has been pointed out by some is a repayment of some of the billions in Santee Cooper debt. In social media posts South Carolina Senator Shane Massey pointed out some of the specious thinking:
“SC [Santee Cooper] has A ratings only because of statutory protections. It has absolutely nothing to do with the way SC has been run. If they were rated based on how they’ve been run . . . wow.”
Referring to this comment: “Santee Cooper has paid off nearly $1 billion of that debt.” Said Massey: “There’s little to brag about here. This has very little to do with anything innovative SC has done. That’s primarily because of the $900M settlement, referenced later.”
The current rating indeed cites a strong financial position and that is due to the ability of the board to raise its rates without oversight beyond the board. How long can that last with customers on watch? Or with customers facing billions of debt repayment.
As financial ratings go down from neutral and well-informed parties like ratings agencies, that is a warning sign. It was in November and is more evident now.
The South Carolina government took initial steps for a remedy and to protect customers with a sale to clean the slate. A sale is a remedy. Shuffling names on an organizational chart in the company is not dollars and cents. Not a remedy.
The State has the ability to clearly and quickly stand up for consumer protection with a sale of Santee Cooper.