Despite all of Santee Cooper's improvements — and there have been improvements — the state-owned utility is no poster child for good government, or accountable government, or well-run businesses.
As Senate Republican Leader Shane Massey reminded his colleagues on Thursday, when the upper chamber spent more than an hour debating whether it might finally be getting ready to debate debating the utility’s future, "secretive" is baked into its DNA — as evidenced by the lengths to which the Legislature had to go last year to find out about its latest bond issue.
And Santee Cooper remains resistant to any reforms other than those it decides to make — none of which involves regulation by the Public Service Commission. “Anytime you want to talk about meaningful change down there,” Mr. Massey said, “you’re gonna get the same answer: Well, that’s gonna violate the bond covenants. And they continue issuing the bonds with the same bond covenants.”
Combine that sort of sabotage with NextEra’s promise to eliminate nearly $4 billion in debt from the botched V.C. Summer nuclear construction project, and you’d think the Legislature would have jumped at the Florida-based utility’s offer to take Santee Cooper off our hands.
Yet more than a year after NextEra proffered that bid, no one seriously expects the Legislature to accept it. No one's even sure the full Senate is ever going to debate it. And it's not just because Santee Cooper's cheerleaders are blocking the debate.
During Thursday's exchange, Sen. Ronnie Cromer summarized the holdup in a way I wish I had thought of myself: “We prefer to sell Santee Cooper. We don’t prefer to give Santee Cooper away.”
“NextEra prefers that, yeah, we sell it," he said. "But it’s not a sale. It’s a gift to them.… I for one am not for giving anything that’s a state asset to anybody.”
Whether they shared his opinion or not, everybody in the Senate chamber understood what the Newberry Republican meant. But it's been a lifetime since our state's high-paid experts evaluated all the bids — way back in a pre-COVID world — and those of us who aren't constantly being lobbied for a decision might have forgotten the details.
So with special interests buying radio and internet advertising and targeted promotions to convince us that what NextEra charges for electricity in other states is relevant and that the utility won’t recoup the debt in customers’ monthly power bills, it might be useful to recall those details.
It's true that NextEra offered to assume Santee Cooper’s $3.6 billion debt. It also offered to pay the state about $600 million in cash and refund customers $541 million for V.C. Summer debt payments they had already made.
In return, NextEra would get what Mr. Cromer called “somewhere between $11 (billion) and $13 billion in assets,” along with the right to sell power to 2 million South Carolinians. It also would leave the state to cover around $600 million in pensions and other obligations. And lay off up to 700 South Carolinians. And receive legislative pre-approval for $2.3 billion worth of new construction of power generation, along with the right to keep charging customers even if it never used any of that power generation — essentially the same Base Load Review Act arrangement that fueled the V.C. Summer debacle.
On top of all of that, our high-paid experts determined, NextEra's electricity rates would be higher than Santee Cooper's — from Day One. And as Dominion customers know, utilities aren't content to hold rates steady for long after they buy a distressed utility.
NextEra's bid also required the Legislature to let it pay a fee of about $5 million a year instead of up to $175 million a year in property taxes on power plants, transmission lines, office buildings and real estate that Santee Cooper currently owns. NextEra’s CEO did offer to take the tax break out of the package — in return for raising rates by an equal amount.
By far the most attractive part of the proposal — and clearly at least part of the reason NextEra thought it might get away with offering what was otherwise such a lousy deal — was the $541 million in refunds. That's because it would have settled a class-action lawsuit that threatened to send the utility into default and force the state to either bail it out or else risk damaging South Carolina's reputation as a good place to do business.
But somehow, Santee Cooper managed to settle the lawsuit on its own, which eliminated its existential threat — and the attractiveness of NextEra’s bid.
Could NextEra make a better offer? Maybe so. NextEra supporters who care about ratepayers say the utility brings smarter, more nimble management that would drive down power bills over time much more than a state agency could. So maybe it’s worth asking for a new bid, since settling the lawsuit effectively meant Santee Cooper submitted a second reform proposal.
But unless and until we see a better offer, we can’t assume that lower rates in other states will mean lower rates here — particularly since its first offer included just the opposite, and since NextEra will have an expense in South Carolina that it doesn't have in all those other states: a nearly $4 billion debt from a pair of unfinished nuclear reactors that will never generate a watt of power.