Baseball player Yogi Berra’s aphorism seems true now. South Carolina policymakers and Santee Cooper customers stand at a fork in the road. Three forks, really.
The South Carolina Department of Administration (DOA) just released a report summarizing the alternative paths South Carolina can take regarding the state’s energy future and the role Santee Cooper will have in it (And kudos to the DOA tenacious work and a highly detailed report. There had to be immense pressure in its effort. Job well done!).
As South Carolina consumers look to the future, what are the three options?
- Reform: This concept is that Santee Cooper will self-correct. It proposes additional legislation that will keep the utility in government hands. It does not pay off the nearly $8 billion debt or pay back customers for what they’ve paid for the VC Summer Plant. Nor does it settle the lawsuit that’s hanging over Santee Cooper and threatens it with bankruptcy.
- Management Contract: This option says that Dominion Energy will provide three executives and manage the utility. Essentially, do what should have been done for years. Like the first option, it does not resolve the debt, money paid by consumers for a failed nuclear plant, or resolve the lawsuit.
- Sale: This option puts the utility into the hands of a company, NextEra, with a track record of owning and managing varied other energy assets. It pays off the debt, resolves the lawsuit, and provides $941 million in refunds for Santee Cooper customers.
The reform plan trusts that the Santee Cooper utility will know how to unwind the troubles it created. The option assumes Santee Cooper will know the right things to do, do them, has the skills to do them.
“Let history be your guide,” is good advice as the legislature weighs the bids. The Department of Administration said of Santee Cooper in the report: “Santee Cooper does not have a history of effecting the kinds of changes contemplated by the Reform Plan, so its ability to achieve the benefits of the Reform Plan remain unclear.” (p. 11 of the report)
Basic, plain speaking.
The management contract basically turns the keys to the utility over to someone else. The idea: “Here, you give it a try.” This option keeps most of the status quo, including the debt and the lawsuit. Dominion would have a few people in place for managing the utility.
Halfway measure in the big scheme of things. A Band-aid.
The management contract and self-reform both keep the State of South Carolina in the utility business and keep customer debt in place for the long term.
Sale: A sale of Santee Cooper to NextEra Energy is the option that gets the State of South Carolina out of the power business and eliminates debt fast. A sale is the most free enterprise of options. A sale makes one entity accountable in ways that Santee Cooper has never been accountable to policymakers and customers.
A sale is a concrete option that cleans up the debt mess and associates with a company with a track record of infrastructure improvement. A sale eliminates the kind of worries that have plagued the State in the past few years.
South Carolina is at a fork in the road.