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SC Debt: A Million Dollar Decision. Time’s Up.

From Scott Carlberg

story in The State says, “The 177,000 customers that Santee Cooper directly serves now are paying about $5.35 a month, on average, for the failed [V.C. Summer] nuclear project. Barring a sale or another major change, that eventually will rise to $13.33 a month.”

It adds up to real money, out of customers’ real pockets, to pay for a nuclear plant that isn’t built and operating. Citizens have a right to have their voices heard on this, in a way that leads to a thorough and fast decisions. The tough decision-making that leaders say in campaigns they can make.

Now the state is waiting. Proposals are being reviewed by the consultant hired by the State of South Carolina for the possible purchase of Santee Cooper. Just waiting to hear the details. Next is the decision on what to do from the South Carolina General Assembly (sale of Santee Cooper depends on elected officials taking action).

Let’s reflect on the statements made by elected officials about the issue. Late last year one elected official said that the State took its “eye off the ball” on the nuclear debt and Santee Cooper issue. In just the last week as the 2019 General Assembly convened and looked at priorities an elected official said, “We’re tired of energy.” Another said that the votes to sell Santee Cooper are not there in the General Assembly.

Let’s look at those statements. No question, South Carolina has been facing a big energy issue. For a long time. Fatigue can be understandable in any extensive debate. Tired is not a reason for delay, though. If there is no support to make a change that manages the debt, what is the plan to pay the bills? South Carolinians who would have to with the bill if the state doesn’t sell Santee Cooper deserve an answer.

There is $1 million a day added in debt. Million a day. The longer the decision-making takes, or, making decisions that are halfway to the goal, extend the debt and burden.

The job must be completed. People are waiting. People are paying. More every day. By simple math, $946,000 a month now. $2,359,000 a month later. Each month.

The debt is not a payment to a productive end for consumers. What else could those funds be doing – in the State? For families?

Customers of Santee Cooper and Santee Cooper Co-ops need the General Assembly to see this issue through to the end. Maybe a sports analogy helps. Clemson’s football team came back to South Carolina victorious. Good planning and solid execution paid off. The team drove the ball. It ran that game. Clemson doesn’t punt on second down; leaders should drive to a decision on Santee Cooper and its impact on consumers, too.

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ECC recently listed the facts of “who, what, where…” in a blog when it come to the possible sale. Much of that is reprinted below.

Here’s a level-set the facts as a reporter might, but just briefly. This gets the basics in one place for our readers.

Who:

  • Santee Cooper is a water and electric utility, owned by the State of South Carolina. The utility serves a cumulative 2 million South Carolinians. About 180,000 residential and commercial customers. Central Electric Power Cooperatives and its 20 member coops; cities of Bamberg and Georgetown. Three wholesale customers.
  • Governing Board: Santee Cooper has its own board of directors.
  • Panel: A joint (House-Senate) Public Service Authority Evaluation and Recommendation Committee was named to oversee the potential sale of Santee Cooper.
  • Consultant: This panel hired the consulting firm ICF International (Fairfax, VA) to look at the proposals for a purchase of Santee Cooper
  • Possible buyers: Various utility organizations have been speculated as possibilities. Private investor(s) could be considered. A buyer doesn’t have to be in business in South Carolina now.
  • Governor Henry McMaster: Has been said in the press to support a sale of Santee Cooper.

What:

  • A buyer would be purchasing electric generation facilities, the transmission/distribution network, and water operations. A proposal could be for all or a portion of the utility.

When:

  • Proposals were due to ICF Jan. 14.
  • The sale requires legislative action. ICF will report to the House-Senate panel. The panel has to present a bill to the General Assembly recommending a sale of Santee Cooper.
  • The General Assembly has a few months in its regular session to act on a bill. A special session could be called to make a decision, too.

How:

  • Paying debt: As is, “State-owned Santee Cooper, which owes $4.3 billion on the V.C. Summer project, remains poised to pass on its debt to its customers,” said the SC Budget for 2018-19 (page 28) Adding that the Governor wants to “make ratepayers whole and keep the burden of Santee Cooper’s debt off the citizens of South Carolina.”
  • Bid consideration criteria for Santee Cooper is: A) A minimum amount of electric utility experience. B) Be investment grade. C) Maintain the Federal Energy Regulatory Commission (FERC) license and lakes. D) Full defeasance and/or assumption of debt. E) Use no state funds. F) Acknowledge Central Electric under the Coordination Agreement. (Source: South Carolina Public Service Authority Investor Presentation, Nov. 27, 1028)
  • One State Senator said that there will be no exact weighting on each criteria, but they will be viewed as a whole to determine what is best for citizens. He said that 20+ firms have expressed some sort of interest though no bids are in yet.
  • One idea that was floated said the State may consider having someone else run the utility, though the State would still own it. Perhaps that is a half-way decision. It would not address the $8 billion in debt. Address the appropriate ownership of the utility and the debt.

Why:

  • Santee Cooper owes more than $4 billion in nuclear debt and some $4 billion in operating debt. The State of South Carolina owns the utility. Customers typically pay costs that a utility incurs to build and operate its system. That large chunk of money has to be managed and paid. If the debt is not eliminated, Santee Cooper customers will pay higher bills over the next 38 years.