Santee Cooper is asking the state Supreme Court to take up its dispute with South Carolina’s electric cooperatives straight away, angling to avoid a long court battle over a third of the state’s energy supply.
At issue is whether the state’s cooperatives, which sell power to nearly 800,000 homes and businesses, should have to pay for Santee Cooper’s failed nuclear project.
Santee Cooper, which provides power to the co-ops, took on more than $4 billion in debt to build a pair of reactors that will never be finished.
The co-ops are on the hook for most of that tab — about $3 billion — and they’re fighting to avoid the bill. They filed a lawsuit against Santee Cooper saying they should only be responsible for the cost of power plants that produce electricity.
If they’re able to avoid the nuclear project’s costs, Santee Cooper will be in an enormous financial bind. The Moncks Corner-based utility, which is owned by the state, is fighting the co-ops’ claims, but says it needs quick resolution before the legal uncertainty hurts its creditworthiness.
Jim Brogdon, the utility’s interim chief executive, said Monday the Supreme Court request is an effort to "expedite the process" — and uphold the Santee Cooper board’s authority to set rates for its customers.
"We need immediate Supreme Court action on this fundamental issue," Santee Cooper general counsel Michael Baxley said in a statement. "Credit rating agencies have already reacted to the pending circuit court litigation, citing the uncertainty it creates."
In its filing with the Supreme Court, Santee Cooper accuses the co-ops of trying to use the courts to force it into bankruptcy. If they're allowed off the hook, the utility says it "eventually would be unable to maintain its ongoing operations and fulfill its obligations to debt-holders."
The Electric Cooperatives of South Carolina, a trade group, said in a statement it welcomed a faster-moving legal process. But it said Santee Cooper's filing "appears to be more about saving Santee Cooper and less about what’s best for consumers."
"We look forward to finding a path to a swift resolution to this matter for our members that protects them from footing the bill for someone else’s mistakes," said Lawrence Hinz, chairman of Central Electric Power Cooperative, which buys power for the state's co-ops.
Santee Cooper previously tried to move its dispute with the cooperatives into arbitration, which could have shielded the fight from public view. It backed off that plan after it met resistance. Going straight to the Supreme Court could yield a faster result.
The failed expansion of the V.C. Summer Nuclear Station has upended the state’s energy sector, casting enormous uncertainty over South Carolina’s largest utilities. Nearly a year after the project was canceled, there’s little certainty about who will pick up the $9 billion bill.
Nearly 5 percent of Santee Cooper’s electric rates are earmarked for the unfinished reactors, which are in a rural area north of Columbia. Its partner, South Carolina Electric & Gas, collects 18 percent of its rates — $37 million a month — for the project.
Lawmakers are expected to discuss those rates later this week when they return to Columbia to debate a state budget and utility reforms. Among the proposals they’re expected to consider is a measure to temporarily slash SCE&G’s rates.