Report critical of coal plant plans

Santee Cooper hasn't fully revealed the economic risks to investors about its plan to build a new coal-fired power plant in the Pee Dee, and the new power plant likely will cost hundreds of millions of dollars more than the utility is saying, according to a new report released Wednesday.

A Santee Cooper official dismissed the report, saying the power company's numbers "are solid" and information had been "fully disclosed to the public."

The report's author is Tom Sanzillo, a former first deputy comptroller for the state of New York, who produced it for the League of Women Voters and Conservation Voters of South Carolina. The Rockefeller Family Fund paid for the report.

Sanzillo oversaw a $150 billion pension fund during his stint in the New York State Comptroller's Office. He also has testified against coal plant projects in other states.

Santee Cooper failed to properly identify the financial risks of building two new 600-megawatt generators near Florence in its recent offering of mini-bonds to the public, the 17-page analysis said. Santee Cooper issues the tax-free bonds in $200 denominations and uses the proceeds for capital projects.

Last month, Santee Cooper published a notice about the bonds saying the federal government is considering legislation to place a cost on carbon dioxide emissions, and that this "may have material adverse effects on the Authority's operations and future financial performance in ways that we cannot currently predict."

The analysis for the conservation groups said that Santee Cooper has in fact studied the potential costs of this legislation, citing estimates by a Santee consultant. That consultant said among other things that coal plants with a $20 tax per ton of carbon dioxide would make coal plants less economical than nuclear plants or generators run by natural gas. Last year, Santee Cooper's plants emitted about 26 million tons of carbon dioxide.

"By generally adopting a passive stance toward the financial challenges of new carbon regulations, (Santee Cooper) has poorly positioned itself, its investors and customers," the report said.

Laura Varn, vice president of corporate communications, said Santee Cooper is "confident that we've fully disclosed financial information so the public can make an informed decision," and that the agency has been "open and transparent about all the financial costs of the Pee Dee Energy Campus."

She said even when carbon dioxide costs are taken into account, a new plant still is more economically viable than other power-generation options.

The report for the conservation groups comes amid rising costs for coal, increases driven in large part by China and India, which are building one to three new coal plants every week.

Meanwhile, coal plants are major sources of greenhouse gases, such as carbon dioxide, and both presidential candidates favor legislation that would put a cost on industries that emit large amounts of carbon dioxide.

Santee Cooper now gets about 80 percent of its energy from coal, and the new Pee Dee generators would increase that figure to 84 percent.

Citing this dependence on coal, Nucor Steel earlier this year sent a letter urging Santee Cooper to keep nuclear power in its mix of future energy sources, warning that because of "the uncertainties associated with future construction costs, carbon cost and fuel cost, among other things, a diverse mix of base-load generation will be crucial to maintaining a reasonable supply of power at reasonable rates." Nucor, nevertheless, supports Santee Cooper's Pee Dee plan.

The report for the conservation groups said the new Pee Dee plant will cost much more than $1.25 billion. "More recent estimates by both Santee Coopers consultants and industry experts put the cost as high as $2.1 billion — and rising."

Ann Timberlake, executive director of the Conservation Voters of South Carolina, said the report "shows that Santee Cooper has yet to come clean with the full costs of adding more coal when we have safer and cheaper options for meeting our power needs."

Reach Tony Bartelme at 937-5554 or tbartelme@postandcourier.com.