Santee Cooper Finally Addressed Its Debt … Just Not Very Well

I am (thankfully) not a ratepayer of Santee Cooper – South Carolina’s catastrophically mismanaged, debt-addled government-run utility. I am, however, a taxpayer of the Palmetto State – which owns this anti-competitive albatross.

I’m also a citizen of South Carolina … which continues to be held back on multiple fronts by the chronic ineptitude of this “rogue agency,” which has a legislatively guaranteed monopoly when it comes to producing environmentally unfriendly, inefficiently generated power.

Why state lawmakers failed to heed the advice I gave them thirteen years ago and offload Santee Cooper to the private sector I’ll never know … because doing so would have turned a multi-billion dollar loss into a multi-billion dollar windfall.

Instead of offloading the utility, though, lawmakers decided to plunge the Palmetto State headfirst into a $10 billion command economic boondoggle –  NukeGate. This project was supposed to produce a pair of next generation, pressurized water reactors capable of generating a combined 2,300 megawatts of energy.

Instead, it produced nothing but lies … and debt … and higher rates on South Carolina energy customers.

The lies and debt have continued long after Santee Cooper and its former private sector partner, SCANA, pulled the plug on the botched construction of these since-abandoned reactors nearly four years ago.

What has the S.C. General Assembly done since then? Nothing …

Unfortunately, debate over the latest proposal to “reform” Santee Cooper in the aftermath of the NukeGate fiasco has utterly failed to address the utility’s escalating debt. Similarly there has been almost no discussion of the impact this tidal wave of red ink is having (and will continue to have) on Santee’s residential, commercial and industrial consumers.

Until this week, that is …

On Tuesday, state lawmakers charged with assessing Santee Cooper’s future finally got around to addressing the debt issue … seeking detailed answers from utility executives as to how their “reform” plan would reduce the exposure of the utility to potential default.

Not surprisingly, Santee Cooper was limited in its ability to respond to such questioning.

One lawmaker who grilled Santee Cooper leaders was senator Josh Kimbrell of Spartanburg, S.C. – who pointedly inquired as to whether the utility’s optimistic view of its current cash situation was due to the fact it had the “full faith and credit” of South Carolina at its back.

“If there was some form of taking the backing of the state off the table, in other words, making sure the taxpayers of South Carolina were not liable for the debt – would you still have a rosy outlook on the long-term bond outlook?” Kimbrell asked.

***

Santee Cooper didn’t have much in the way of an answer, telling Kimbrell “that sounds like one of those bond council questions.” However, its chief legislative enabler – S.C. Senate judiciary chairman Luke Rankin – fired back that state government was not on the hook to pay back Santee Cooper’s debt if the agency were to default.

Is that true?

S.C. senator Wes Climer of Rock Hill, S.C. made it clear a Santee Cooper default would be disastrous for the state under any circumstances – referring to it as a potential “contagion” event.

Even Rankin seemed to agree with that assessment … to the extent he knew what the word “contagion” meant.

“I don’t understand that but it clearly makes sense,” he said.

Sheesh …

Contagion fears aside, Santee Cooper ratepayers are clearly going to be the ones paying for the utility’s ongoing negligence – again, assuming lawmakers don’t come to their senses and dump this anchor before it is too late.

Which brings us to the next round of questions …

Another lawmaker who didn’t hesitate to grill Santee Cooper on its financial particulars was newly elected senator Michael Johnson of Fort Mill, S.C.

According to Johnson, the energy prices the utility has been charging his regional electric cooperative are more than ten percent higher than the rates assessed by Duke Energy. Johnson wanted to know how the current “reform” bill would impact this discrepancy moving forward.

The initial response he received was opaque …

First, Santee Cooper lobbyist Geoff Penland tried to pass Johnson’s inquiry off by referring him to so-called “transparency” provisions in the legislature’s “reform” bill.

The senator wasn’t buying it …

“Your answer is that transparency is going to result in lower rates,” Johnson fired back. “I’m not sure that transparency alone is going to change the rate structure in South Carolina.”

Indeed it won’t …

Penland’s second attempt to get out of this box was quite illuminating, though.

“Right now Santee Cooper is in a rate freeze related to the Cook settlement,” he said, referring to a controversial class action agreement reached last year with its customers.

RELATED | Santee Cooper “Reform” Bill Looking Like Stalling Tactic

Wait … what does that agreement have to do with the rates Santee Cooper charges the state’s network of electric cooperatives? Particularly in connection with its debt?

“In terms of going forward, (the cooperatives) would have the ability to influence that more,” Penland said, seemingly implying that once the rate freeze was lifted, Santee Cooper would have more flexibility in addressing the price gap with the cooperatives.

The only way to achieve that “flexibility?” Higher rates ….

Like I said … it wound up being a very revealing exchange.

Look, I am glad lawmakers are finally questioning Santee Cooper about its debt – which simply cannot be addressed via “reform.” Still, it was disappointing to see the ongoing lack of concern for the utility’s ratepayers in these discussions. In fact, the only two lawmakers who seemed to have a real heart for what is happening to Santee Cooper customers were senators Marlon Kimpson of Charleston, S.C. and Margie Bright Matthews of Walterboro, S.C.

Both of these lawmakers impressed me with their questions … which always sought to bring the conversation back to the real-world ramifications of proposed policy changes on low-income ratepayers (who already pay a disproportionate percentage of their income on energy costs).

Kimpson and Matthews deserve credit for bringing these issues to light … and I certainly hope their concerns remain at the forefront of lawmakers’ thinking as the Santee Cooper debate advances.

(SPONSORED CONTENT)

***

WANNA SOUND OFF?

Got something you’d like to say in response to one of our articles? Or an issue you’d like to proactively address? We have an open microphone policy here at FITSNews! Submit your letter to the editor (or guest column) via email HERE. Got a tip for a story? CLICK HERE. Got a technical question or a glitch to report? CLICK HERE.