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Santee Cooper bids submitted as SC Legislature weighs selling utility

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State lawmakers closed the bidding period for Santee Cooper as the legislature prepares to decide whether they should off-load the state-run utility. File/Staff

COLUMBIA — The window of opportunity to submit bids for Santee Cooper closed Monday as state lawmakers remain split about whether to offload the state-run utility, its 179,000 customers and its nearly $8 billion of debt. 

The deadline to file an offer for Santee Cooper comes as state lawmakers enter the second week of the 2019 legislative session and Gov. Henry McMaster continues his months-long push to sell the Moncks Corner-based utility. 

It's not clear how many offers have been fielded. The final results of the bids might not be available to state lawmakers until February as ICF, a company hired by the Legislature, reviews the proposals. 

Charlotte-based Duke Energy, the state's largest power provider with roughly 760,000 customers, said it submitted a proposal for the General Assembly to review.

Pacolet Milliken — a Greenville-based investment company that owns Lockhart Power, which provides electricity in five Upstate counties — also confirmed it provided an offer. 

The Electric Cooperatives of South Carolina filed two different proposals.

Neither the cooperatives nor the companies would disclose details of their offers. 

Two other possible suitors — NextEra Energy of Florida and Dominion Energy of Virginia — declined to answer whether they submitted an offer. 

The cooperatives are Santee Cooper's largest customers. NextEra is looking for a foothold in South Carolina.

Dominion just cemented its takeover of SCANA Corp., the majority owner of the aborted $9 billion V.C. Summer nuclear project. Santee Cooper's role as a minority partner in the project, considered the biggest business failure in state history, led to calls for its sale.

The prospect of purchasing Santee Cooper outright might be a tough sell for some of the companies. The state-run utility borrowed nearly $4 billion for the unfinished nuclear project north of Columbia. 

If a private company were to take over Santee Cooper, it would have to immediately refinance that debt because it was issued by a state agency — a move that would almost certainly lead to higher interest rates. As a public agency, Santee Cooper can offer investors tax-free returns.

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State Sen. Paul Campbell, R-Goose Creek, said the legislature needs to determine what is in the best interest of Santee Cooper's customers and the state as a whole. 

Santee Cooper announced last year that its direct customers, on average, could end up paying roughly $6,200 for the V.C. Summer project by the time the utility pays off its nuclear debt in 2056. That didn't include the 20 electric co-ops who get power from Santee Cooper.

Campbell doesn't expect the General Assembly's review of Santee Cooper to happen overnight. He hopes to have a plan of action in place by the end of the legislative session in May. 

There are options other than a sale that have to be considered, too, like an overhaul of Santee Cooper or signing a contract with a private company to manage the utility.  

Dominion voiced an interest in signing a management agreement with Santee Cooper last month. Ryan Frazier, Dominion's spokesperson, would not say whether the company submitted such an offer to the state by Monday. 

"I cannot comment on market rumor and speculation," Frazier said. 

It remains unclear whether the legislature will have any interest in determining the future of Santee Cooper this year as lawmakers grapple with the state's faltering education system, as outlined in The Post and Courier’s five-part series titled “Minimally Adequate.”

State Rep. Russell Ott, D-St. Matthews, said lawmakers need to keep an open mind as the offers are reviewed. He believes the legislature owes it to Santee Cooper's customers to explore every option available to reduce their future electric rates. 

"We fought like hell for the customers of SCANA," Ott said. "Why wouldn't we fight like hell for the customers of Santee Cooper and the co-ops?"

State Rep. Murrell Smith, R-Sumter, chairman of the special legislative committee set up to review the Santee Cooper offers, expects that process to begin next month. While his committee will offer recommendations based on the information they receive, he said it will be up to the entire General Assembly to decide Santee Cooper's fate. 

"There are ardent supporters of Santee Cooper in the Legislature and outside the Legislature that are going to defend this at all cost," Smith said. "At the end of the day, I think the entire Legislature has to make the decision."

CORRECTION: An earlier version of this story mistated the name of the company reviewing the bids for the South Carolina Legislature. The company's name is ICF, not ICF International. 

Reach Andrew Brown at 843-708-1830 or follow him on Twitter @andy_ed_brown.

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