Why would a company like NextEra want to buy Santee Cooper … debt and all? It sees opportunity in South Carolina and believe they can help grow South Carolina. As South Carolina grows, the need for electricity grows, and NextEra earns a return on that investment.
It’s a win for NextEra and, more importantly, a big win for South Carolina. Do well together. A both-win.
This is a great example why utilities do economic development. Every company wants to operate in a smart, healthy, vibrant environment, and if a company can be a catalyst for that, even better. If a company has ample assets versus a long list of liabilities that makes it more likely to see that both-win for everyone.
South Carolina has a current example of an economic development concern. The case-in-point: Century Aluminum and Santee Cooper wrestling about electric rates. The aluminum company has issued a warning about a possible plant closure with a loss of 300 jobs. Century gets 25 percent of its power from Santee Cooper and the rest from other sources at lower costs, say reports. Century notes that Santee Cooper costs are nearly double what they pay elsewhere. (Source)
According to Century Aluminum it can’t keep its doors open at current Santee Cooper rates, and will be forced to shut down, resulting in lost jobs and money flowing into the community. Local economy suffers and Santee Cooper loses a business customer. A both-lose scenario resulting from a mismatch of Santee Cooper’s capabilities and community/business need.
Getting to that point about rates is not good for any region. This is where a positive, skilled company can make a difference. In stark terms: “The crazy thing about this is Santee Cooper is the entity that’s going to make this all happen. A state agency that is supposed to be helping economic development in this state is doing exactly the opposite,” said President and CEO of the Small Business Chamber of Commerce, Frank Knapp. (Source)
This reverse-economic development may have a negative effect outside South Carolina. “The loss of one of the last six primary aluminum smelters in the U.S. would irreparably harm our country’s ability to produce this critical material,” said the aluminum plant’s manager.
Not just the situation, but the overall publicity about this cannot help the image of the region to attract new business. It can be a turn-off to others looking at the region. Why enter a place with a problem like this?
Successful utilities easily speak the same language as customers and relocation prospects. “Because electric utilities generally operate as for-profit companies, they are often less bureaucratic and nimbler than traditional forms of economic development,” said Area Development magazine. Competition as an investor-owned business breeds discipline.
Business camaraderie creates mutual attraction in economic development. “Utility companies are themselves large-scale organizations with first-hand experience in many areas that the new business may share. Utility expertise in right of way, environmental assessments, information technology, asset management, mapping, transportation, telecommunications, and procurement can be helpful to particular industries considering a site in the service territory. The expertise of the utility’s economic development team can unlock doors that simply cannot be opened directly by other participants in the process.” (Source)
The question: Does the utility show that it will be a smart, constructive, able teammate in a region?
Seen from NextEra’s perspective, it looks at South Carolina and sees opportunity. NextEra CEO Jim Robo told the South Carolina Senate Finance Committee as much in February: “We love this state. We think it has one of the best business climates in the country. It’s got a growing population, it’s got above average economic growth and a highly skilled workforce, and it’s an opportunity for us to make a significant difference in the state…our plans and investments would create jobs, reduce emissions and help drive the next phase of growth in the state by providing low cost power…”
In other words, NextEra wants to buy Santee Cooper because they believe in the future of South Carolina and NextEra. NextEra has the resources and track record to make it even brighter – a both win.
Feature image from a construction project near Charlotte, NC