We’ve known for more than a year now the S.C. Senate wasn't going to agree to sell Santee Cooper. And there have been serious questions about whether the state-owned utility’s friends in the upper chamber would even allow a reform measure to go through, despite the disaster that was Santee Cooper's nuclear escapade with the now-defunct SCE&G.
Reform still could die on the Senate calendar, but finally, we at least have a reform measure ready for debate. And it has the support of Santee Cooper and its biggest customer, the electric cooperatives.
The co-ops are locked in a contract to purchase power from Santee Cooper through 2058 and can’t get out unless the utility is sold, so the fact that they’re happy with the deal suggests that the changes are significant.
As attorney John Frick told the Senate Judiciary Committee on Tuesday, S.464 includes four reforms the co-ops considered essential: some degree of regulatory oversight of Santee Cooper; routine legislative oversight; a requirement that the utility consider the interests of customers, and not just its own financial integrity and economic development; and two ex officio seats for co-op officials on the board, to ensure that the Santee Cooper board hears their perspective on rates and other matters.
As much progress as those changes would represent, though, they are far from perfect. Although state regulators would have to sign off on Santee Cooper’s construction and long-term energy plans and would get to comment on rate proposals, and customers could appeal rate hikes to the state Supreme Court, Santee Cooper’s board still would set the utility’s rates. That is, Santee Cooper would continue to act largely as an unregulated monopoly.
Lawmakers say covenants in Santee Cooper’s outstanding bonds make it financially impossible to subject it to rate review by the Public Service Commission, and they’re probably right. But they could — and should — prohibit the utility from issuing any more bonds with those restrictions, so the PSC could regulate its rates once the old bonds are paid off. Unfortunately, neither S.464 nor a reform measure passed by the House, H.3194, would do that.
And at the risk of sounding like a broken record, the package also lacks the single most crucial reform: The Santee Cooper board would remain almost completely autonomous.
The bill does allow the governor to remove a board member, absent the normal stringent requirements, if a legislative committee recommends the member be removed "upon good cause shown." But it’s worth remembering that the Public Utility Review Committee looked the other way while Santee Cooper and SCE&G kept throwing money into the V.C. Summer nuclear construction debacle.
And absent a near-unanimous recommendation from the committee, the governor still couldn’t fire Santee Cooper board members before their terms end unless they refuse to show up for meetings or commit malfeasance, misfeasance or other actions that could subject them to criminal prosecution under the state’s overly broad misconduct in office law. They still couldn’t be removed simply because they made hideous decisions that left ratepayers on the hook for $4 billion for a pair of unfinished nuclear reactors that will never produce a single watt of electricity.
It’s hard to overstate the need to expand the governor’s authority: If Santee Cooper board members knew the governor could fire them, they almost certainly would have let their boss know when things started going south at V.C. Summer — and the governor could have alerted the Public Service Commission, so it could have stopped rubber-stamping SCE&G’s rate increases until the utility either pulled the plug or began exercising more oversight to get the out-of-control project back on track.
And yes, the other reforms in S.464 might provide the same sort of protection. Might. But why wouldn't legislators make the changes that almost certainly will protect us? After all, governors had the authority for decades to remove Santee Cooper board members for any or no cause, to no ill effect. Lawmakers only removed that power in 2005, for reasons that had little to do with preserving Santee Cooper’s integrity and nearly everything to do with their animosity toward then-Gov. Mark Sanford.
And based on what’s happened in the two years since the Senate refused to confirm Charlie Condon to chair the Santee Cooper board — Gov. Henry McMaster hasn’t even tried to appoint anyone else, so a board member he would not have selected has held the job — we know that the Senate already has the tools to keep a governor from exerting inordinate control over the utility.
One of the mantras of the folks who want to sell Santee Cooper is that the utility can’t reform itself. That’s one case where they’re absolutely right. But the Legislature most certainly can.
S.464 is a good start, and with a couple of tweaks, it can turn Santee Cooper into a utility that will serve its customers and our state well — unless or until someone presents a good plan (NextEra’s is anything but) to take it off the taxpayers’ hands.