The wait is over. We finally know the players: NextEra, Dominion Energy and, of course, Santee Cooper. One of them will provide electricity to the 2 million South Carolinians who receive electricity directly or indirectly from the state-owned utility. Now what?
Santee Cooper faces the possibility of being sold to Florida-based NextEra or operated by Virginia-based Dominion Energy because it didn’t blow the whistle on SCE&G’s lax oversight of the failed V.C. Summer nuclear expansion, after lawmakers pushed the state-owned utility into becoming a junior partner in the doomed project.
All of the bids seek to lay out a new future for Santee Cooper and the more than 2 million South Carolinians it supplies with water and electricity, but looming over the entire process is the failed V.C. Summer nuclear project.
The Legislature is wise to consider all the options: selling the utility, retaining it but contracting out its management or allowing the current management to remain in place. And the format for that consideration — a three-way competition between Santee Cooper’s own proposal and what experts considered the best purchase and management bids — probably was the least bad way do that.
But now that those three offers have been made public, it’s also wise for lawmakers to keep in mind what we learned from the demise of SCE&G, the senior partner in the $8 billion nuclear construction failure.
Dominion Energy purchased SCE&G’s parent company SCANA after lawmakers rolled back electricity rates and the Virginia-based utility agreed to assume the debt from the nuclear debacle — but still charge customers for $2.3 billion in debt on the failed project.
And now it’s preparing to request a rate increase in May. In the fall, CEO Tom Farrell told analysts and investors that the company is “under-earning in South Carolina” and that by law it’s entitled to collect higher rates than it agreed to when it purchased SCANA a year ago.
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.
Although the quick move to raise rates tells us something about how Dominion does business — and should be factored into lawmakers’ consideration of that company’s offer to run Santee Cooper — it also reminds us of how investor-owned utilities operate: They maximize shareholder profits, which means charging customers as much as regulators will allow. That’s the opposite of what a state-owned utility is supposed to do: charge only what it must to pay its bills.
So it’s not necessarily surprising NextEra’s proposal offers slightly higher rates in the long term. Despite a significant sweetener — it offers the potential of resolving a dangerous ratepayer lawsuit by refunding most of the $670 million Santee Cooper already has charged for the V.C. Summer project — a NextEra purchase must include iron-clad rate guarantees, not just for next year or the next decade but for many decades to come.
Santee Cooper’s own proposal has to be evaluated in terms of the governmental reforms it includes, since we’ve learned that the utility’s governance let it become unaccountable and inefficient, and what might happens if it loses the lawsuit.
In South Carolina, we don’t have much choice about how much we pay for electricity, because we don’t have much choice about where we purchase our electricity.
Of course, projected or even promised rates should not be the only consideration. Lawmakers must take into account how the utilities plan to generate electricity, and particularly their plans for new generation. We’re nowhere near the point where we can rely entirely on alternatives to nuclear or fossil fuels to meet our electricity demand. But South Carolina’s other major power supplier needs to rely far more on solar and battery storage than either Dominion or Duke energy does — and significantly more than Santee Cooper has to this point.
A year and a half after South Carolina’s largest business failure, lawmakers have the opportunity to significantly reduce the pain of that failure — or make it worse. They must abandon any preconceived notions about whether it’s better to have a state-owned utility or an investor-owned utility and focus entirely on a clear-headed analysis of what each offer would mean to the utility customers who will have to live their decision.