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Editorial: Smart plan by SC utility Santee Cooper, but it must play by the rules

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Santee Cooper's board voted to give the utility's deputy CEO a bonus on Friday, but its CEO chose not to be considered for the additional compensation that was included in both their contracts. File/Cindi Ross Scoppe/Staff

We welcome Santee Cooper’s cost-cutting measures and its plan to pay down its nuclear debt, phase out expensive and environmentally damaging coal plants and grow its green-energy portfolio, without raising rates.

We can debate whether the moves are aggressive enough, but they should have happened long ago. The fact that they’re happening now reflects the wisdom of bringing in experienced outside managers. That too should have happened long ago but appears to have been precipitated by the Legislature’s decision to take bids for the purchase of the state-owned utility, which was left with $4 billion in debt with nothing to show for it after it joined partner SCE&G in abandoning their over-budget, behind-schedule construction project at the V.C. Summer nuclear plant. Nothing like a good threat to motivate action.

We also welcome Santee Cooper’s decision to drop an agreement with Atlanta-based Southern Co. to seek further cost savings. There’s nothing wrong with partnering with an investor-owned utility — in fact, that might turn out to be the best path forward — but it’s important that it happen in the right way.

Under the S.C. law passed this spring to limit political influence in a possible sale, the Legislature strictly limited the sorts of conversations Santee Cooper could have with other utilities through the end of this year, as utilities put together purchase proposals and Santee Cooper develops a competing proposal to make internal changes and remain in state hands. (Utilities developing bids face similar restrictions.) State officials raised concerns in recent days that CEO Mark Bonsall had skirted those limits in discussions with Southern Co. and in so doing possibly scared off potential bidders.

Marcia Adams, who is overseeing the bidding process as director of the state Department of Administration, was absolutely correct to raise a red flag. We all lose if utilities decide not to offer bids because they think they can’t trust our state to stick to the process required by law.

But it’s important to keep the larger context in mind. Owning a regulated utility, which is what a privately owned Santee Cooper would be if it’s sold, is essentially a license to print money. If some utilities decide not to go through the expense of putting together a purchase bid because they fear that Santee Cooper is developing a respectable self-reform proposal and that they therefore won’t be able to buy it at a cut-rate price, then good riddance. The goal here should not be to privatize Santee Cooper, or to make sure Santee Cooper remains a state-owned utility.

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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 the electric cooperatives can meet that goal, we need to let them take over. If Santee Cooper can meet that goal, then we need to keep it in state hands.

Legislators shouldn’t worry that the state will have squandered $20 million to evaluate the bids if that last option turns out to be the best. To the contrary, that bidding process is what scared the Santee Cooper board into bringing in the fresh eyes that are finding smarter ways to run the utility — and that should result in a better deal for customers, regardless of the outcome of the bidding process.

Santee Cooper absolutely should continue seeking ways to work with other utilities to lower its operating costs and further diversify its energy sources — under the watchful eye of Ms. Adams.

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