It is hard not to be hugely suspicious of anything South Carolina’s government-run utility Santee Cooper proposes. As we noted in a recent post, the high-priced leaders of this state-owned power provider put even master illusionists to shame with their repetitive smoke and mirrors shenanigans.
Beyond the dubious financial assumptions associated with Santee Cooper’s so-called “reform” plan, the utility simply hasn’t regained the public’s trust after deliberately misleading everyone during the multi-billion dollar NukeGate fiasco of 2017.
Remember that scandal? In case anyone needed a refresher, there are a pair of abandoned, half-completed pressurized water reactors sitting dormant in Jenkinsville, S.C. – reactors which cost nearly $10 billion (and counting) and will never generate so much as a watt of energy.
South Carolina lawmakers socialized nearly $2 billion of private sector investment risk associated with this project – while political appointees at Santee Cooper racked up billions more in debt (while saddling ratepayers with higher residential prices).
All while lying through their teeth about the status of the reactors …
(Click to view)
(Via: Santee Cooper)
“Santee Cooper has become incapable of shooting straight with the public,” we noted in a post last month, citing the utility’s ongoing propagandizing and clandestine efforts to short-circuit its proposed privatization.
This week, Santee Cooper is touting a settlement reached with the new owners of Westinghouse – a former contractor on the failed V.C. Summer nuclear generating station expansion project. The deal would end an ongoing lawsuit and allow the utility to sell off some of the materials associated with this abandoned project.
Westinghouse’s new corporate owners would get a cut of the proceeds, though, according to a report published by Andrew Brown of The (Charleston, S.C.) Post and Courier.
And Santee Cooper is apparently ready to give it to them …
“Right, wrong or indifferent, they have a valid point that the other equipment has no value without the intellectual property that goes along with it,” Santee Cooper chief executive officer Mark Bonsall told reporters in announcing the settlement. “You can’t use it in a nuclear installation without their consent.”
Bonsall has previously speculated that the settlement with Westinghouse could be worth as much as $425 million to Santee Cooper – although again, we would advise our readers to take any projections from him with an ocean of salt.
Also … assuming Bonsall’s best-case projections are accurate, Santee Cooper would still be billions of dollars in the hole for these reactors, with no real way to retire this debt other than passing it on to consumers.
“This is not a good deal for the ratepayers because they are going to continue to take the hit for the incompetence of Santee Cooper,” one industry observer told us. “The timing is very suspicious and the notion of a settlement validates gross negligence on behalf of Santee Cooper board and its well-paid former CEO.”
Wait … was further evidence of Santee Cooper’s gross negligence really required?
Not really … but such an acknowledgement could prove quite costly considering there is an ongoing class action suit against the utility.
Worth recalling? The “well-paid former CEO” referenced by our observer is none other than Lonnie Carter, who received a multimillion-dollar golden parachute from ratepayers in the aftermath of NukeGate. Ratepayers are also continuing to shell out for Carter’s criminal defense bills in connection with an ongoing federal investigation into the debacle.
Also, the reference to “timing” refers to the legislature’s current deliberations as to the proposed sale (or private sector management) of the utility – which continue to be conducted under a shroud of secrecy.
Our view? We have serious reservations regarding this settlement.
First, the math doesn’t add up. At best, the figure cited barely eclipses one tenth of what Santee Cooper owes – on the nuclear project alone. Where is the other ninety percent coming from?
And what of its other debt?
(Click to view)
(Via: High Flyer SC)
Second, exactly who is going to purchase this highly specialized equipment? The reactors being built across the river in Georgia have long-since passed the point of needing any of these materials – leaving China as the only nation in the world currently building these reactors.
“China has the capacity to make its own equipment for much cheaper,” our industry expert stated. “This is not like a hardware store with parts that can be used interchangeably in other plants or industries.”
Also … what is the cost of settling?
Brookfield Business Partners – which recently purchased Westinghouse – is going to drive a hard bargain, unless of course the firm is solely interested in recouping some short-term cash from this asset.
Either way, a deal is going to cost Santee – which means it is going to cost Santee ratepayers.
How much? Good question. While Santee’s board has voted in favor of the “basic terms” of an agreement, Bonsall still has to negotiate its specific terms. In most situations, a CEO would be inclined to strike the best possible deal on behalf of ratepayers but in Santee Cooper’s case it actually benefits the agency to negotiate poorly (thus making it less appealing for potential suitors to purchase/ manage).
Which begs the question …
“Are they just trying to spend money to make themselves less attractive?” our industry source wondered.
Indeed …
Either way, Santee Cooper long ago gave up the right to be taken seriously when it comes to such negotiations – which is all the more reason it needs to be taken out of the hands of politicians and their appointed bureaucrats sooner rather than later. In fact, had state lawmakers listened to us Santee Cooper would have been privatized more than a dozen years ago, before it embarked on the NukeGate fiasco.
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