Two years ago, Santee Cooper and SCE&G announced they were abandoning construction of V.C. Summer Nuclear Station units 2 and 3. The reactors were nowhere near complete though $9 billion had been spent.
The financial hit was enormous. When Santee Cooper’s share of the debt was added to its other obligations, the state-owned utility’s customers, many of them in rural areas, would owe over $7 billion in debt (not including interest). Payments would stretch to 2056.
In the 24 months since the summer of V.C. Summer, there has been much finger-pointing, and blame has been cast about freely. Some have even said that Santee Cooper was a victim of SCANA, a patsy. “There was one and only one bad decision coming out of Santee Cooper HQ, and that was to work with SCANA!” you could almost hear defenders saying.
But is that true? Was V.C. Summer a fluke, or was it a part of a trend, a pattern of bad and costly decision-making?
Let’s look at the complete picture. What does it show?
Executives, the same ones who oversaw the V.C. Summer disaster, received $5.6 million in bonuses between 2009 and 2016. Another $500,000 in bonuses is being proposed for 2019.
The former CEO receives a retirement package worth up to $800,000 a year.
Another $19 million is being spent annually to preserve the mothballed V.C. Summer units 2 and 3. That’s not surprising. But another defunct plant, the Pee Dee campus, is costing nearly that annually too. A bad gypsum contract is costing $10 million to $15 million a year.
Last year alone, the company’s customers were on the hook for $9 million in legal fees, at $475 an hour. The company also spent $1 million for Wall Street investment advice.
Between 2010 and 2018, customers have been forced to play banker too, seeing grants and no-interest loans issued across the state, costing $121 million.
Then there was the $20,000 spent on a public relations effort to defend the agency against an accurate analysis of the impact of the debt on ratepayers.
Most recently, Santee Cooper hired a CEO at a salary more than double his predecessor’s. He brought with him a deputy who is collecting a salary greater than the former CEO’s.
It’s death by a thousand cuts for customers.
None of this is a secret. All of these numbers are easily Googled and have been documented in The Post and Courier. Yet, together, it demonstrates both a trend and a historic lack of self-awareness.
If a South Carolina family took a huge financial hit, or even saw one coming, mom and dad would cancel vacations, stop eating out and cut up credit cards. But not Santee Cooper. Instead, it operated as if it had millions to spend rather than billions to repay.
While Santee Cooper is state-owned, it’s highly unlikely there will ever be a direct bailout courtesy of state taxpayers. The debt will continue to be paid by its customers on monthly bills that keep climbing higher, when the average person in its service area lives on just $27,065 a year.
This trend should not be allowed to continue, and it doesn’t have to.
Next year, lawmakers will be offered three choices on the future of Santee Cooper: outsource its management, expect Santee Cooper to fix itself, or sell Santee Cooper to private enterprise.
Selling Santee Cooper is the only option that pays off the utility’s mountain of debt. It’s also the only option that can realistically rescue customers from the certainty of higher rates.
Clearly, V.C. Summer wasn’t a fluke. It was indicative of a trend at Santee Cooper. For ratepayers’ sake, that trend should come to an end next year.
Dr. Oran P. Smith is a senior fellow at the Palmetto Promise Institute.