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Editorial: Santee Cooper compromise is a big step forward, but there's more to do

Summer Nuclear Station (copy) (copy)

The Legislature could sign off Tuesday on a plan to subject Santee Cooper to regulatory oversight, nearly four years after the state-owned utility and the now-defunct SCE&G abandoned a $9 billion construction project at the V.C. Summer Nuclear Station north of Columbia.

People who were determined to sell Santee Cooper no matter what will complain that the plan up for final approval in the S.C. Legislature  is an unworkable reform. Reformers will complain that the plan doesn't go far enough — particularly by not putting the state-owned utility on a path to eventual PSC regulation of its electricity rates.

We certainly won't argue that the compromise approved last week by a House-Senate conference committee is perfect. It still doesn’t let the governor remove board members for more than a handful of reasons, most of which can lead to criminal indictment.

But make no mistake: This is still real reform that will provide transparency and oversight that will move the utility toward being an accountable state agency — which it never really has been.

Santee Cooper was a secretive, out-of-control entity that refused to act like a state agency long before it blew $4 billion on the failed V.C. Summer nuclear plant expansion that lawmakers pushedd it into undertaking along with the now-defunct SCE&G.

Final legislative approval of H.3194 — along with Senate confirmation of former Rep. Peter McCoy as chairman of the Santee Cooper board — should finally allow our state to move beyond the V.C. Summer debacle.

While there’s something in the compromise plan (or not in the plan) for everybody to object to, there’s also something for everybody to love — and for all but my-way-or-the-highway sorts to support despite their objections. That’s the very definition of a good compromise, which is what all good laws are built around.

This one is supported by conservationists who have been fighting for years to drag the utility into the clean-energy era. It’s supported by Santee Cooper’s biggest customers, the electric cooperatives, which are locked in a long-term contract to purchase power from the utility that could only be broken by a sale. The leading legislative advocates of selling Santee Cooper signed off on the plan even absent any mechanism for a sale, because they believe the reform components are muscular enough to make a difference. Santee Cooper’s biggest legislative advocates signed off as well.

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House and Senate negotiators still have to review details that they left to staff to work out, but the plan they agreed to last week requires approval from the Public Service Commission or the Office of Regulatory Staff for most of the Santee Cooper board’s major decisions; requires that board to provide more information to ratepayers; and gives ratepayers a chance to complain about proposed rate hikes — although the final decision on monthly power bills will still be up to the board.

Legislators, conservationists and the co-ops say one of the most important reforms requires PSC approval of the utility’s long-term energy plans, which determine how it can spend money and should be the main driver of power bills.

The legislation removes all of the current board members over the next four years — which should help eliminate the culture of arrogance that has permeated management for years — and shortens the terms for new board members. It still doesn’t let the governor remove board members just because he doesn’t think they’re doing a good job, but it does remove a chilling anti-accountability provision that made it illegal for a governor to even ask board members to consider voluntarily resigning.

House Ways and Means Chairman Murrell Smith told his fellow negotiators he hoped they wouldn’t have to address Santee Cooper again. It’s an understandable desire — and it’s even reasonable to hope that lawmakers won’t again have to be consumed for nearly four years by questions about the agency’s future. But H.3194 includes a complex set of regulatory changes that are almost certain to need tweaking as unintended consequences pop up. Lawmakers need to be willing to make those changes.

And it's neither reasonable nor wise to close the door on reforms that the compromise leaves on the table.

It makes sense, as House Speaker Jay Lucas argued, to have a process in place for vetting bids the next time the question of selling the utility comes up — as it surely will. Unlike public education, electricity isn’t a service that government itself has a moral or constitutional duty to provide, so our state should be prepared to consider any reasonable offers. There never was one this time, and we would be surprised if an investor-owned utility could pay the taxes and dividends that Santee Cooper doesn’t have to pay and also provide lower rates. But it's not impossible, so lawmakers should work next year to spell out that process through separate legislation.

Likewise, lawmakers should get Santee Cooper on a path toward full PSC regulation by prohibiting the utility from issuing new debt with covenants that make that financially prohibitive.

And, at the risk of sounding like a broken record, they still need to return to the pre-Mark Sanford law that allowed governors to fire board members for any reason. That law worked for decades without hurting Santee Cooper’s bond ratings, or its ability to provide reliable power at a good rate to 2 million South Carolinians. It would work again.

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