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The Santee Cooper debate: Where do we go from here?

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South Carolina State of the State (copy)

S.C. House Speaker Jay Lucas, R-Hartsville, and Senate President Harvey Peeler, R-Gaffney, applaud as Gov. Henry McMaster recognizes guests at his State of the State address in January 2020, before the coronavirus pandemic upended the legislative session. Santee Cooper’s future will come back up for debate this month on the floor of the South Carolina House. Sean Rayford/AP

Santee Cooper’s future will come back up for debate this month on the floor of the South Carolina House, where the appetite for selling the state-owned power and water utility has never been greater.

The speaker of the House has suggested, at a minimum, firing Santee Cooper’s entire board and executive team if the agency can’t be sold to the highest bidder.

The most powerful man in the slower-moving state Senate, Finance Committee Chairman Hugh Leatherman, has introduced his own proposal to offload the embattled power provider after it lost $4 billion of ratepayers’ money on the failed V.C. Summer nuclear plant expansion project.

And Gov. Henry McMaster bashed the agency in his State of the State address Wednesday, telling lawmakers the “reform or dissolution” of Santee Cooper is long overdue.

But even the influence of those powerful leaders might not prove enough to overcome the passionate band of legislators, mostly in the Senate, who will fight to keep the 86-year-old utility under state ownership.

Lawmakers have declared 2021 is the year they will finally decide whether to sell Santee Cooper, setting the stage for one of the most contentious debates of the year. With both sides digging in their heels, here is a quick overview of the debate to come.

Why do some lawmakers want to sell Santee Cooper?

Remember how the Moncks Corner-based utility shocked everyone in July 2017 by announcing it was pulling out of the decade-long V.C. Summer expansion project? Which it had already spent $4 billion on? And that ratepayers were going to have to foot that bill on their future power bills? That started us on this path.

Since then, lawmakers have peeked under the hood at Santee Cooper and found a bloated executive team that was endowed with duplicative retirement plans, a history of poor business dealings that stuck ratepayers with unnecessary costs and a soured relationship with its largest customer — the state’s 20 electric cooperatives.

Some lawmakers were furious to learn that Santee Cooper, a state agency, had hired contract lobbyists to persuade the General Assembly not to sell the utility.

More recently, some lawmakers have accused Santee Cooper’s executives of misleading them about the utility’s finances, particularly its recent decision to take out $100 million in new debt.

Selling Santee Cooper is a popular idea among lawmakers who think state government should be out of the power business, believe a private company could provide cheaper power and are no longer trust the agency’s leaders.

Why are other lawmakers defending Santee Cooper?

Santee Cooper’s strongest defenders in the Legislature tend to represent districts that are home to the power and water utility’s 1,620 employees or its 177,000 direct-serve customers, mostly along the Grand Strand and Lowcountry.

The fact remains that Santee Cooper still has relatively low rates, thanks to its not-for-profit structure and its ability to borrow money cheaply. It has excellent reliability ratings and high satisfaction marks from its residential customers.

A previous state analysis showed Santee Cooper’s electric rates would rise if it were sold to the highest bidder, Florida-based power company NextEra Energy.

Santee Cooper is also the state’s homegrown public power utility. It provides power to some 2 million South Carolinians, and selling it would likely mean ceding control to an out-of-state power company.

Some lawmakers aren’t keen to do that after Santee Cooper’s partner on the V.C. Summer project, Cayce-based S.C. Electric & Gas, was just taken over by Virginia-based Dominion Energy. Dominion is currently pursuing a deeply unpopular rate hike.

They prefer restructuring Santee Cooper and providing it more state oversight to make it more accountable.

What's at stake?

Only the future of South Carolina's energy portfolio, the state's economic development efforts, the management of lakes Marion and Moultrie and the jobs of more than 1,600 Santee Cooper employees.

Oh, and the cost of electricity for those 2 million South Carolinians.

Who are the players in this debate?

House Speaker Jay Lucas, R-Hartsville, wields great influence over any major vote in the Statehouse’s lower chamber. House budget committee chairman Murrell Smith, R-Sumter, has been on top of this issue for a while.

State Reps. Kirkman Finlay, R-Columbia, and Leon Stavrinakis, D-Charleston, led the special committee that came up with the House’s legislation. And you can bet on Republican Reps. Sylleste Davis — a Moncks Corner resident and former Santee Cooper employee — and Heather Crawford of Myrtle Beach to fight any effort to sell.

In the Senate, Leatherman and Senate Majority Leader Shane Massey, R-Edgefield, are fed up with Santee Cooper. So are Senate President Harvey Peeler, R-Gaffney, and veteran Democrat Nikki Setzler of West Columbia.

But the effort to sell Santee Cooper could be stymied in the Senate, where a small group of legislators can wield the chamber’s rules to kill legislation.

Powerful Senate Judiciary Committee Chairman Luke Rankin of Myrtle Beach opposes a sale. So does Senate Democratic leader Brad Hutto of Orangeburg, Democrat Dick Harpootlian of Columbia and Republicans Stephen Goldfinch of Murrells Inlet and Chip Campsen of Charleston.

Senate Transportation Committee Chairman Larry Grooms, whose district includes Santee Cooper's headquarters, would probably filibuster a sale until he faints.

What proposals are up for debate?

Legislators have already filed a handful of bills that could determine Santee Cooper’s future. Some call for the agency’s sale. Others call for its reform.

Later this month, after next week’s break, the House will begin debate on a mammoth piece of legislation, H. 3194, that includes both.

Among other things, that bill would reopen the bidding for Santee Cooper, allowing the General Assembly to negotiate better offers from NextEra and other potential buyers. The thinking is that there were serious concerns with NextEra’s first offer — notably that it would raise customers’ power bills, which defeats the purpose of this whole exercise.

The House proposal also calls for Santee Cooper’s board to be replaced and for more state oversight of the utility’s electric rates, which are currently set by its politically-appointed board.

The debate on the Senate side, where two separate committees are dissecting the issue, will likely move slower.

On Tuesday, Leatherman introduced S. 444, a bill that explicitly calls for Santee Cooper’s sale and empowers a panel of six legislators to continue negotiating with NextEra Energy.

Massey and state Sen. Mike Fanning, D-Great Falls, authored S. 134, a bill that gives the governor more power to fire members of Santee Cooper’s board.

Rankin submitted S. 464, which calls for term limits for members of Santee Cooper’s board and greater state oversight of Santee Cooper’s electric rates.

And state Sen. Tom Davis, R-Beaufort, filed S. 439, suggesting South Carolina essentially dissolve Santee Cooper’s electric operations and turn it into a regional transmission organization in which several utilities can share power lines and save costs for customers.

Everyone involved in this debate seems to agree that Santee Cooper can't continue as it has for the past decade. But building consensus on a path forward could be tricky.

Reach Avery Wilks at 803-374-3115. Follow him on Twitter at @AveryGWilks.

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