There were no white hats in South Carolina’s most colossal business failure: SCANA-owned SCE&G failed to provide adequate oversight in the over-budget, behind-schedule and ultimately abandoned construction of two reactors at the V.C. Summer nuclear plant. State-owned Santee Cooper, either a willing junior partner or a too-timid one, failed its obligation to protect all the people of South Carolina, not just its own customers, by refusing to alert the governor or utility regulators of problems that doomed the project.
The Legislature laid the groundwork for the two utilities to squander $9 billion with a law that paid SCE&G for failure and made it nearly impossible for regulators to turn down rate requests, and another that removed nearly all consumer protections from the regulatory process. And the regulators were quite happy to quietly abet the scheme.
When Dominion Energy purchased S.C. Electric & Gas earlier this year, it agreed to take on a sprawling web of lawsuits the South Carolina utility faced as a result of the failed V.C. Summer nuclear project.
Two years after the collapse of the project, it’s outrageous to think that Santee Cooper should be responsible for helping defend SCANA successor Dominion Energy in lawsuits that allege, among other things, that SCANA executives engaged in racketeering by fraudulently inflating power bills to generate unlawful proceeds. (It is likewise outrageous to suggest that Dominion should be responsible for legal claims by Santee Cooper customers, as Santee Cooper argues.)
Of course, it was outrageous that Santee Cooper paid millions of dollars in bonuses to SCANA executives for the great work they were doing as the construction project was collapsing — and that SCANA kept trying to collect for those bonuses even after the utilities pulled the plug.
So, who knows? Maybe Santee Cooper is obligated under the utilities’ contract to help pay the legal bills for bad decisions made by SCANA executives. We trust that the courts will be able to sort out precisely what the utilities’ agreement did and didn’t require Santee Cooper to help pay for in the event that the project fell apart because of greed, incompetence, criminal actions or all of the above.
SC electric utility Santee Cooper hopes to convince the Legislature not to sell it by assembling a plan to keep ratepayers' power bills down, with more solar energy and less coal. But there's no way to enforce its promises unless it convinces lawmakers to reform its governing system.
But if Santee Cooper is legally bound to help pay for SCE&G’s failures, it would be just one more example of dereliction by Santee Cooper’s executives and board members. And that would make this just one more example of why it is imperative for the Legislature to inject some political accountability into the state-owned utility.
Unfortunately, everybody at the Statehouse is so fixated on either selling Santee Cooper to an investor-owned utility or else making sure that it isn’t sold that no one is thinking about accountability.
As we have said repeatedly, the goal should be to find the best long-term solution for all of Santee Cooper’s customers and the state of South Carolina. If an investor-owned utility can meet that goal, then we need to sell to that utility. If Santee Cooper can meet that goal, then we need to keep it in state hands.
Either way, for however much longer Santee Cooper remains state owned, the Legislature needs to repeal the law that prohibits the governor from removing board members unless they break the law or commit one of a small list of other offenses, such as not showing up at meetings. Even if that doesn’t happen until a sale is approved, it’s still important for the Legislature to repudiate the law, which allowed board members to help SCANA hide information that state regulators needed in order to deny continued rate increases — and in that way created the circumstances that led to all those lawsuits Dominion now expects Santee Cooper to help pay for.