Santee Cooper responding to changed needs

Santee Cooper's Board of Directors has approved a management recommendation to suspend permitting activities on the proposed Pee Dee Energy Campus in Florence County.

The facility has broad-based support from local and state elected officials, business and civic leaders and people from throughout the Pee Dee community, not only because of the economic boost it would have on the region, but also because of its environmentally responsible design.

It has successfully received an air permit from DHEC and was nearing the final stages on the water and land permit process with the U.S. Army Corps of Engineers.

Why, then, has Santee Cooper announced the suspension of the permitting process of this model facility?

The answer is, for the same reason we proposed the facility in the first place: need.

We have repeatedly said we would only build what is required to meet the needs of our customers.

There have been three recent and significant changes that could diminish the need for power, which has lead to the business decision of suspending the permit process.

The first reason is the ongoing recession. While its initial impact on sales was forecast to be short term, the recession has now created a longer-term diminished power load.

Our sales are down 5 percent from last year. Unfortunately, we anticipate continued lower sales with this extended economic downturn and projected slow recovery.

Secondly, proposed federal government regulations, specifically the cap and trade legislation that recently passed the House, could have tremendous cost implications for Santee Cooper customers.

The American Clean Energy and Security Act calls for carbon capture and sequestration technology to be placed on new power plants by 2025, and there currently exists no technology to do that.

The cost of this and the carbon tax are unknown but expected to be high, and we must carefully weigh this uncertainty as we plan for the future.

Lastly, Central Electric Power Cooperative, our largest customer, intends to reduce a portion of its power supplied by Santee Cooper and acquire that power from another supplier, beginning in 2013.

The 1,000-megawatt reduction equates to the power requirements of the five Upstate Cooperatives. Reducing Central's power load requirement from Santee Cooper by that amount obviously affects the need for the 600-megawatt Pee Dee Energy Campus.

Our customers could benefit from this suspension decision, because they may not need to bear the capital costs of constructing the facility.

Our customers have supported us through the permitting process to date, and I trust they will understand that we are acting in the best interest of our customers, our bondholders and the state of South Carolina. We must always remain flexible to do what is best for the system.

The energy industry is facing unprecedented economic and legislative challenges.

Throughout, we have -- and will -- stay focused on what is best for our customers. This includes making sure we have enough power to meet customer needs and that the cost is as low as possible.

As a non-profit entity, our aim is to do what is right for our customers and the state.

Our mission is to be the state's leading resource for improving the lives of all South Carolinians; that rests on our ability to constantly evaluate our plans and maintain flexibility to change now and in the future.

We are deeply grateful to all who have worked so very hard thus far on behalf of the Pee Dee Energy Campus, and we pledge to always make the decisions that we think best serve our customers, our bondholders and the state, as we continue our efforts to fulfill our mission to improve the quality of life for all South Carolinians.